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•AMERICAN-BOOK-C0:VIPANY' 


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in  2007  with  funding  from 

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http://www.archive.org/details/eclecticcompleteOOmayhrich 


THE  ECLECTIC 


COMPLETE 


BOOK-KEEPING 


Author  of  "Mnyhew's  University  Book-keepinp,"  "Mayhev>'s  Practical  Book- 

keeping,"  and  "Means  and  Ends  of  Universal  Education,"  and 

formerly  Superintendent  of  Public  Instruction  in  Michigan. 


"  Deliver  all  things  in  number  and  weight,  and  pnt  all  in  writing  that 
thou  givest  out  or  receivest  in."— Ecclksiasticus  xlii  •  7. 


NEW-YORK     ..-.     CINCINNATI     .;.     CHKJAGO 

AMERICAN    BOOK    COMPANY 

FKOM    TUK   PKESS  OF 
VAN  ANTWEKP,  BRAGG,  <fe  CO. 


Eclectic  Educational  Series. 


ARITHMETICS. 

RAY'S  SERIES: 

Ray^s  New  Primary  Arithmetic. 
Ray's  New  Intellectual  Arithmetic. 
Ray's  New  Practical  Arithmetic. 
Ray's  New  Higher  Arithmetic. 
Ray's  New  Test  Examples  in  Arithmetic. 

Two-Book  Series: 
Ray's  New  Elementary  Arithmetic. 
Ray's  New  Practical  Arithmetic. 

WHITE'S   SERIES: 

White's  Primary  Arithmetic. 
White's  Intei-mcdlate  Arithmetic. 
White's  Complete  Arithmetic. 

Two-Book  Series: 
White's  Netv  Elementary  Arithmetic. 
White's  New  Complete  Arithmetic. 

ECLECTIC  BLANK  BOOKS. 

A  SET  OF  BLANK  BOOKS  — Consisting  of  a  Day  Book.  Journal,  Ledger,  Cash 
Book,  and  Bill  Book— has  been  prepared  expressly  to  accompany  this  volume, 
of  sufficient  size  and  properly  luled,  for  the  use  of  Students  In  writing  up  the 
Sets,  the  Examples  in  Opening  and  Closing  Books,  and  the  Practical  Problems. 

KEY  TO  BOOK-KEEPING. 

A  KEY  to  this  Book-keeping  has  been  prepared  for  the  convenience  of  teachers 
in  examining  the  work  of  students,  in  which  the  Sets,  the  Examples,  and  the 
Problems  of  the  work  are  properly  written  up  for  comparison. 


Copyright, 

1884, 

Van  Antwerp,  Bragq  &  Co. 


ECLECTIC  PRESS. 

Van  Antwerp,  Buaog  A  Oo. 


A7  2.9? 


PREFACE. 


The  schools  of  a  country  should  teach  what  its  chil- 
dren and  youth  will  need  to  know  and  practice  on 
leaving  them.  Less  than  fifty  years  ago  the  principal 
branches  taught  in  our  public  schools  were,  reading, 
writing,  and  arithmetic.  But  times  have  changed.  The 
courses  of  study  in  the  improved  schools  of  the  present 
time  have  been  much  extended,  but  not  always  wisely. 
Branches  that  were  formerly  of  minor  importance  have 
now  become  essential.  Among  them  is  Book-keeping, 
which,  thirty-five  years  ago,  was  not  authorized  as  a 
public  school  study,  even  in  the  city  of  New  York. 
With  railroads  now  traversing  our  widely  extended 
country  in  all  directions,  and  with  the  telegraph,  the 
telephone,  and  cheap  postage,  the  buying,  selling,  and 
exchange  of  products  have  been  greatly  multiplied,  thus 
making  neighbors  of  persons  hundreds  and  thousands 
of  miles  apart.  As  a  consequence,  in  every  portion  of 
the  country  the  comforts  and  luxuries  of  other  parts 
of  it  are  common.  This  easy  interchange  renders  the 
knowledge  and  practice  of  Book-keeping  a  necessity  of 
the  times. 

Besides,  Book-keeping  gives  a  mental  discipline  equal 
to  that  gained  from  the  study  of  any  other  branch, 
and  superior  to  that  realized  from  the  study  of  most 
branches.  Double-entry  Book-keeping,  while  a  science, 
deserves  to  rank  among  the  fine  arts.  It  challenges  the 
admiration  of  lovers  of  the  beautiful  and  the  true.     It 


IV  PREPACK 

cultivates  the  judicial  powers  of  the  mind.  It  quickens 
and  strengthens  the  love  of  justice  and  equity.  It  pro- 
motes fair  dealing  among  men.  It  contributes  to  pri- 
vate and  public  virtue.  It  leads  to  economy  and  thrift 
in  private  and  public  affairs.  Its  general  study  and 
practice  will  reduce  pauperism  and  crime,  and  promote 
frugality  and  virtue. 

This  work  begins  with  the  elements  of  the  science,  and 
unfolds  and  applies  its  principles,  observing  the  natural 
order  of  sequence.  Its  methods  have  been  tested  in  the 
school  room  for  twenty-five  years,  with  uniform  and  in- 
creasing success.  It  requires  study,  but  its  study  is  a 
delight,  and  wins.  In  this  small  volume  double-entry 
is  clearly  elucidated.  Its  principles  are  applied  to  a 
variety  of  businesses,  including  the  keeping  of  books 
for  individuals,  for  firms,  and  for  joint  stock  compa- 
nies. It  gives  special  attention  to  opening  and  closing 
sets  of  books.  It  treats  difiiculties  which  business  men 
have  brought  to  its  author  as  an  expert  accountant  for 
solution.  It  presents  special  forms  and  books  for  manu- 
facturers, physicians  and  farmers,  and  suggests  others. 
While  particularly  adapted  to  use  in  schools,  by  its  study 
business  men  in  many  cases  may  improve  their  knowl- 
edge of  accounts  and  their  methods  of  business. 

Ira  Mayhew. 

Detboit,  Miai.,  November,  1884. 


CONTENTS 


Page. 

Page. 

Abbreviations  and  Signs 

.      6 

Invoice  Book 

99 

Definitions. 

7 

Third  Set  Rewritten 

100 

Classification  of  Accounts 

.      8 

Cash  Book 

102 

Titles  of  Accounts  . 

9 

Fourth  Set.      . 

104 

Illustrative   Examples     . 

10 

Opening  and  Closing  Books 

111 

Examples  for  Practice    . 

14 

Examples  for  Practice  . 

111 

Double  Entry  . 

16 

Equation  of  Payments  . 

115 

Illustrative  Examples 

16 

Examples  for  Practice  . 

116 

Titles  of  Accounts  . 

.     20 

Equation  of  Accounts  . 

119 

Books  of  Account    . 

.     25 

Examples  for  Practice. 

120 

Rules  for  Journalizing    . 

27 

Short  Method. 

121 

Opening  Books. 

28 

Cash  Balance 

123 

Trial  Balance    . 

29 

Short  Method . 

124 

Closing  the  Ledger  . 

30 

Time  Table      . 

126 

Ledger  Balances 

32 

Practical  Problems 

.     127 

Diagram  for  Closing 

33 

Joint  Stock  Companies. 

134 

Illustrative  Set. 

34 

Their  Organization. 

.  ']36 

Commercial  Papers . 

46 

Installment  Scrip  . 

138 

Second  Set        .        .        . 

53 

Certificate  Book      . 

140 

Commercial  Forms  . 

55 

Transfer  Book 

140 

Closing  Ledger. 

.     69 

Capital  Stock  Ledger    . 

142 

Skeleton  Ledger 

.     73 

Declaring  Dividend 

143 

Bill  Book  .... 

78 

Special  Columns     . 

.     146 

Day  Book  .... 

.     80 

Special  Books   . 

146 

Journal      .... 

.     84 

Time  Book       . 

147 

Ledger        .... 

88 

Physician's  Diary  . 

148 

Third  Set  . 

.     92 

Farm  Accounts 

150 

Sales  Book 

98 

Index       .... 

153 

(V) 


ABBREVIATIONS   AND    SIGNS. 


Acct. 

Account. 

I.  or  Inv. 

Invoice. 

Advtgr. 

Advertising. 

LB. 

Invoice  Book. 

Amt. 

Amount. 

Ins. 

Insurance, 

Ans. 

Answer. 

Int. 

Interest. 

Apr. 

April. 

Invt. 

Inventory. 

Art. 

Article. 

J. 'or  Jour. 

Journal. 

Aug". 

August. 

J.  D.  B. 

Journal  Daj'  Book 

B.  or  Bk. 

Bank. 

J.  P. 

Journal  page. 

Bal. 

Balance. 

Jan. 

January. 

Bbl. 

Barrel.           [Book 

L.  B. 

Letter  Book. 

B.  B. 

Bill  Book,  or  Bank 

lbs. 

Pounds. 

B.  Pay. 

Bills  Payable. 

L.  P. 

Ledger  Folio. 

B.  Rec. 

Bills  Receivable. 

M.  or  mo. 

Month. 

Bush. 

Bushel. 

Mar. 

March. 

C.  or  Ct. 

Cent. 

Nat.  Bk. 

National  Bank. 

Cash. 

Cashier. 

No. 

Number. 

C.  B. 

Cash  Book. 

Nov. 

November. 

Ck. 

Check. 

Oct. 

October. 

Co. 

Company. 

P.  or  p. 

Page. 

C.  O.  D. 

Collect  on  delivery 

Payt. 

Payment. 

Com. 

Commission. 

Pd. 

Paid. 

Const. 

Consignment. 

Pkfir. 

Package. 

Cr. 

Creditor. 

Per  an. 

By  the  year. 

D.  B. 

Day  Book. 

P.  &L. 

Profit  and  Loss. 

Dec. 

December. 

Prem. 

Premium. 

Dep. 

Deposit. 

Pres. 

President. 

Dft. 

Draft. 

R.  R. 

Railroad. 

Dis. 

Discount. 

S.  B. 

Sales  Book. 

Do.  or  do. 

The  Same. 

Sec. 

Secretary. 

Doz. 

Dozen. 

Sept. 

September. 

Dr. 

Debtor. 

Shipt. 

Shipment. 

Ds.  or  ds. 

Days.         [excepted. 

St.  Dft. 

Sight  Draft. 

E.  &  O.  E. 

Errorsand  omissions 

Sunds. 

Sundries. 

Etc.  or  etc. 

And  so  fortli. 

Tr.  or  Trans. 

Transaction. 

Ex. 

Example. 

Viz. 

To  wit;  namely. 

Exc. 

Exchange. 

$ 

Dollars. 

Exp. 

Expense. 

f 

Cents. 

fav. 

Favor. 

@ 

At,  or  to. 

Feb. 

February. 

% 

Account. 

P.  or  Pol. 

Folio. 

% 

Per  cent. 

Prt. 

Freight. 

# 

Number. 

Hdkf. 

Handkerchief. 

V 

Clieck  mark. 

(vl) 

THE  ECLECTIC 


COMPLETE  BOOK-KEEPmG. 


DEFINITIONS. 


Article  1.  Business  is  an  occupation  or  employment 
for  maintenance  or  gain;  as,  farming,  trade,  profession, 
or  other  pursuit. 

2.  A  Transaction  is  the  act  of  buying  or  selling, 
whether  payment  is  made  at  the  time,  or  property  is 
bought  or  sold  on  account  to  be  paid  for  at  some  future 
time. 

3.  A  Debtor  is  one  who  owes  another,  or  is  in  debt  to 
him.  When  a  person  receives  value  from  us,  without  at 
the  time  paying  for  it,  he  becomes  our  Debtor.  When 
property  sold  by  us  is  paid  for  at  the  time,  the  thing 
received  is  Debtor. 

4.  A  Creditor  is  one  who  trusts  or  credits  another. 
When  a  person  gives  value  to  us,  without  at  the  time 
receiving  payment,  he  becomes  our  Creditor.  When 
property  bought  by  us  is  paid  for  at  the  time,  the  thing 
given  is  Creditor. 

Note. — The  Receiver,  or  Thing  received,  is  Debtor.  The  Giver,  or 
Thing  given,  is  Creditor. 

(7) 


8  COMPLETE  BOOK-KEEPING. 

5.  An  Account  is  a  statement  of  the  debits  and  credits 
resulting  from  business  transactions  relating  to  it.  Ac- 
counts are  kept  with  both  persons  and  things. 

6.  Book-keeping  is  a  systematic  record  of  business 
transactions,  showing  the  kinds  and  amount  of  property 
and  debts  at  the  beginning,  the  debits  and  credits,  and 
the  gains  and  losses  arising  from  the  business  transacted, 
and  the  net  result  of  the  business  as  a  whole. 

7.  Assets  or  Resources  embrace  wha':ever  property  we 
possess,  together  with  any  and  all  sums  owing  to  us  in 
notes,  accounts,  or  otherwise. 

8.  Liabilities  include  all  debts  we  owe,  whether  ex- 
pressed in  notes,  in  accounts,  or  otherwise. 


CLASSIFICATION  OF  ACCOUNTS. 

9.  All  accounts  arising  in  business  may  be  arranged, 
according  to  their  nature,  under  proper  heads,  in  each 
of  two  classifications. 

10.  First  Classification.  All  the  accounts  of  a  mer- 
chant's Ledger  may  be  classified  under  the  three  follow- 
ing heads :  (1)  Personal  Accounts ;  (2)  Real  Accounts ; 
(3)  Imaginary  Accounts. 

11.  Personal  Accounts  are  accounts  kept  with  persons, 
firms,  or  corporations  with  whom  we  transact  business. 
These  are  properly  kept  under  the  names  of  the  persons  or 
firms  with  whom  we  deal,  and  show  their  relations  to  us. 

12.  Real  Accounts  are  accounts  kept  with  realties,  and 
include  all  accounts  of  effects  or  things  in  which  we  deal; 
as,  Real  Estate,  Cash,  Merchandise,  Bills  Receivable,  Bills 
Payable,  etc. 

13.  Imaginary  Accounts  are  titles  employed  to  repre- 
sent the  person  or  company  that  conducts  a  business,  or 


TITLES  OF  ACCOUNTS.  9 

to  supply  the  want  of  some  personal  or  real  title  in 
keeping  our  accounts.  Under  this  head  are  included  all 
accounts  that  are  neither  Personal  nor  Real;  as,  Stock, 
Expense,  Interest,  etc. 

14.  Second  Classification.  All  accounts  admit  of  an- 
other classification,  and  are  either:  (1)  Speculative,  or 
(2)  Non-speculative. 

15.  Speculative  Accounts  are  accounts  that  indicate  the 
source  of  gain  or  loss.  Of  this  class  are  Merchandise, 
Real  Estate,  Interest,  Expense,  etc. 

16.  Non-speculative  Accounts  include  accounts  that,  from 
their  nature,  have  neither  gain  nor  loss  connected  with 
them,  unless  it  arises  incidentally;  as.  Cash,  Bills  Re- 
ceivable, Bills  Payable,  Personal  Accounts,  etc. 

17.  Every  account  enters  into  each  of  these  classifica- 
^'^  tions,  thus :  Merchandise  is  Real  and  Speculative ;  Cash 

is  Real  and  Non-speculative;  Interest  and  Expense  are 
each  Imaginary  and  Speculative;  while  Stock  and  Profit 
and  Loss  are  each  Imaginary  and  Non-speculative,  al- 
though Stock  represents  the  dealer  or  speculator,  and 
Profit  and  Loss  may  temporarily  hold  measures  of  spec- 
ulation, or  of  gains  and  losses  that  have  arisen  in  Spec- 
ulative Accounts. 

TITLES  OF  ACCOUNTS. 

18.  The  Titles  of  accounts  are  the  names  by  which  our 
accounts  are  known.  Personal  accounts  bear  the  names 
of  the  persons  with  whom  we  deal;  Merchandise  is  the 
title  commonly  employed  to  represent  any  and  all  kinds 
of  property  bought  and  sold  for  gain;  Bills  Receivable 
include  all  written  promises  of  payment  in  the  future, 
made  by  others,  whether  notes  or  acceptances,  which  we 
hold,  and  on  which  we  are  entitled  to  receive  payment; 
Bills  Payable  include  all  such  written  promises  of  ours, 


10  COMPLETE  BOOK-KEEPING. 

held  by  other  persons,  which  we  are  under  obligation  to 
pay  at  maturity. 

ILLUSTRATIVE  EXAMPLES. 

19.  A  few  illustrative  examples  will  enable  the  learner 
better  to  understand  the  use  of  the  definitions  already 
given.  Personal  Accounts  being  most  readily  under- 
stood, we  begin  with  one,  as  shown  below,  giving  the 
transactions,  and  the  side  of  the  account  to  which  each 
belongs.  We  write  the  name  of  Asa  Adams  at  the  head 
of  the  account,  to  show  with  whom  the  account  is  kept, 
and  bear  in  mind  that  it  is  his  relations  to  us  (not  ours 
to  him)  that  we  consider.  By  reference  to  Arts.  3  and  4, 
we  see  when  persons  become  our  Debtor,  and  when  our 
Creditor.  Dr.  entries  are  always  written  on  the  left  side 
of  an  account,  and  Cr.  entries  on  the  right,  whether  the 
Dr.  and  Cr.  are  entered  with  the  title  of  the  account  or 
not. 

First  Example. 

20.  The  following  seven  transactions  give  rise  to  the 
entries  with  corresponding  numbers  in  the  account : 

Trans.  1.    We  sell  Asa  Adams  one  Hat  for  $5. 
Tr.  2.    We  sell  him  one  Suit  of  Clothes  for  $14. 
Tr.  S.    He  pays  us  $10  in  Cash  on  account. 
TV.  Jf.    He  buys  of  us  on  acct.  Mdse.  worth  $15. 
Tr.  5.    He  sells  to  us  five  Cords  of  Wood  for  $20. 
Tr,  6.    We  pay  his  Order  on  us  for  $25  in  Mdse.* 


*  We  here  insert  the  Order,  as  Asa  Adams  might  liave  written  it, 
if  he  had  wislied  The  Student  to  pay  this  sum  to  James  Workwell : 

(Date)    Place,  Month,  Day,  Year. 
The  Student '.—Please  pay  to  James  Workwell  Twenty-five  Dollars 
in  Merchandise,  and  charge  the  same  to  my  account. 

$25.00.  Asa  Adams. 


ILLUSTRATIVE  EXAMPLES. 


11 


Tr.  7.    We  settle,  and  he  pays  us  the  amount  our  due 
in  Cash.     How  much  does  he  pay  us?  Arts.  $29. 


Dr. 


Asa  Adams 


Or. 


1 

5 

3 

10 

2 

14 

5 

20 

4 

15 

7 

29 

6 

25 

59 

59 

21,  Before  the  7th  Trans,  occurred,  Asa  Adams  had 
bought  of  us  $59  worth  of  Merchandise.  We  had  given 
him  no  money,  or  legal  tender,  which  is  a  "  measure  of 
value ; "  but  money  ivorth,  which  is  called  "  money  of 
account."  He  had  paid  us  $10  in  Cash,  and  $20  worth 
of  Wood,  or  "  money  of  account,"  making  together  $30. 
He  therefore  owes  us  the  difference  between  the  $59 
which  we  have  let  him  have,  and  the  $30  he  has  paid 
us.  This  difference  is  $29,  which  he  pays  us,  as  stated 
in  Trans.  7,  when  the  account  is  settled,  and  may  be 
ruled  off  as  shown  in  the  Example.  It  will  be  observed 
that  the  place  of  the  footings  (as  the  amounts  of  columns 
are  called)  is  determined  by  the  greatest  number  of 
entries  on  either  side  of  the  account,  both  footings  being 
placed  on  the  same  horizontal  line. 


Second  Example. 


22.  The  Transactions  of  this  Example  are  likewise 
numbered,  as  are  the  entries  in  the  account  based  upon 
them. 

Trans.  1.    Ben  Brooks  buys  of  us  a  Horse  for  $150. 

Tr.  2.    We  sell  him  a  Village  Lot  for  $420. 

Tr.  S.    He  buys  of  us  a  Wagon  and  Harness  for  $275. 


12 


COMPLETE  BOOK-KEEPING. 


Tr.  ^. 
Tr.  5. 
Tr.  0. 
Tr.  7. 
Tr.  8. 
in  Cash. 


We  buy  of  him  a  House  and  Lot  for  $800. 
We  sell  him  two  Cows  for  $25  each. 
We  sell  him  21  Sheep  at  $3.25  each. 
We  buy  of  him  \)  Tons  of  Coal  at  $4.75. 
We  settle.     The  balance  of  the  account  is  paid 
Did  he  pay  us,  or  we  him?  and  how  much? 
Ans.  He  paid  us  $120.50. 
Dr.  Ben  Brooks  O. 


1 

150 

4 

800 

2 

420 

7 

42 

75 

3 

275 

8 

120 

50 

5 

50 

6 

68 

25 

963 

25 

963 

25 

23.  From  Arts.  3  and  4  we  learn  that  when  in  a  trans- 
action property  of  any  kind  received  from  others  is  paid 
for  at  the  time  by  values  given  them  in  exchange,  neither 
buyer  nor  seller  becomes  either  Dr.  or  Cr.  In  such  cases 
the  Thing  received  is  Dr. ;  and  the  Thing  given^  Cr.  The 
Thing  received  is  Dr.  because  it  costs  us  whatever  is  given 
in  exchange  for  it.  The  Thing  given  is  Cr.  because  it 
entitles  us  to  the  value  received  in  exchange  for  it. 

24.  In  keeping  an  account  with  Cash,  the  principles 
just  stated  apply.  When  Cash  is  received  by  us,  it  costs 
us  the  giving  up  of  property,  the  rendering  of  personal 
service,  or  an  obligation  to  pay  at  another  time,  and  is 
hence  Dr.  When  Cash  is  given  by  us  to  others,  it  serves 
us,  by  paying  for  something  we  want,  by  cancelling  a 
debt,  or  by  giving  us  a  claim  for  money  or  property  in 
the  future,  and  is  hence  Cr.,  as  is  illustrated  in  the 

Third  Example. 

26.  In  order  to  possess  more  certain  knowledge  of  our 
rec(;ipts  and  payments  of  money,  we  keep  a  Cash  account. 


ILLUSTRATIVE  EXAMPLES. 


13 


Trans.  1.  We  have  ^25  on  liand,  which  remains  from 
wages  heretofore  received,  or  from  property  sold. 

Tr.  ^.  We  sell  28  bush,  of  Wheat  at  $1  per  bushel, 
receiving  Cash  in  payment. 

Tr.  S.  We  subscribe  for  a  Daily  Paper  for  one  year, 
paying  $10  in  advance  for  it. 

Tr.  4'  We  buy  one  Suit  of  Clothes,  for  which  we 
pay  $24. 

Tr.  5.  We  sell  for  Cash  80  bush.  Potatoes  at  60  cents 
a  bushel. 

Tr,  6.  We  receive  payment  in  full  for  a  Note  of  $25, 
with  $1.50  for  Interest  on  the  same. 

Tr.  7.  John  Smith  pays  us  $17.20  in  settlement  of 
his  account. 

Tr.  8.  We  pay  John  Jones  $14.25  for  a  bill  of  Mdse. 
this  day  bought  of  him. 

Tr.  9.    We  balance  the  Cash  account. 


Ih'. 

Cash 

Cr. 

1 

25 

3 

10 

2 

28 

4 

24 

5 

48 

8 

14 

25 

6 

26 

50 

9 

96 

45 

7 

17 

20 

144 

70 

144 

70 

96 

45 

Wishing  to  ascertain  whether  our  Cash  account  has 
been  correctly  kept,  and  whether  we  have  the  amount 
on  hand  the  account  calls  for,  we  examine  the  account 
and  find  that,  with  the  amount  on  hand  at  the  begin- 
ning, and  the  four  sums  received  since, — 

There  has  come  into  our  hands    ....      $144.70 
The  three  sums  paid  out  together  make    .  48.25 

We  ought  therefore  to  have  on  hand  the 

difference $96.45 


14  COMPLETE  BOOK-KEEPING. 

On  counting  our  money  we  find  we  have  on  hand  this 
amount.  The  money,  as  counted,  agreeing  with  the 
sum  required  by  the  figures,  we  conclude  the  account 
has  been  correctly  kept,  and  that  there  has  been  no  mis- 
take either  in  paying  or  receiving  the  sums  required  by 
the  transactions.  We  therefore  enter  on  the  Cr.  side  of 
the  account  the  S96.45,  in  red  ink  (here  indicated  by  dif- 
ferent type),  to  show  that  it  has  not  been  paid  out.  The 
footings  of  the  two  sides  now  agree,  and  we  bring  down 
the  balance  not  paid  out,  on  the  Dr.  side  of  the  account, 
in  black  ink,  to  show  that  this  sum  is  still  on  hand;  as 
the  $25  was  at  the  beginning  of  the  account. 

26.  These  three  accounts,  with  ''Adams,"  "Brooks," 
and  "Cash,"  in  connection  with  the  preceding  and  ac- 
companying definitions  and  illustrations,  can  hardly  fail 
to  be  readily  understood.  All  accounts  with  persons  are 
kept  on  the  same  principle  with  the  first  two  of  these; 
and  all  accounts  with  property,  as  Merchandise,  Real  Es- 
tate, Bills  Receivable,  etc.,  are  kept  on  the  same  prin- 
ciple as  that  with  Cash. 

examples  for  practice. 
First  Example. 

Trans.  1.  We  sell  S.  S.  Packard  on  account  a  bill  of 
Mdse.  for  $40. 

Tr.  2.    He  pays  us  $25  in  Cash  on  account. 

Tr.  S.    We  sell  him  one  Horse  for  $240. 

Tr.  4.    We  buy  of  him  a  bill  of  Mdse.     Amt.  $210. 

Tr.  5.    We  pay  his  Order  on  us  for  $35. 

Tr.  6.    He  buys  of  us  a  bill  of  Mdse.     Amt.  $75. 

Tr.  7.    He  pays  our  Order  on  him  for  $30. 

Tr.  8.  We  settle,  and  the  balance  of  the  account  is 
paid  in  Cash.    Do  we  pay  him,  or  he  us,  and  how  much  ? 

Ans.  He  pays  us  $125. 


EXAMPLES  FOR  PRACTICE.  15 


Second  Example. 

Trans.  1.  We  fill  T.  May  Pierce's  order  for  Books, 
Amt.  $75. 

Tr.  2.    He  remits  us  $50  in  Cash  on  account. 

Tr.  S.    We  sell  him  one  Carriage-horse  for  $325. 

Tr.  Jf.    We  fill  his  order  for  Books.     Amt.  $85. 

Tr.  5.    We  furnish  him  a  bill  of  Mdse.     Amt.  $40. 

Tr.  6.  He  remits  us  a  Draft  on  New  York  for  the  bal- 
ance due  us  on  account.  For  what  sum  was  the  Draft 
made?  Ans.  $475. 

Third  Example. 

Trans.  1.  We  sell  a  bill  of  Mdse.  to  R.  C.  Spencer  on 
account.     Amount  $45. 

Tr.  2.    We  receive  $38  in  Cash  from  a  customer. 

Tr.  3.    We  sell  A.  D.  Wilt  a  bill  of  Mdse.  for  $48. 

Tr.  Jf.  We  buy  of  C.  E.  Cady  a  bill  of  Stationery 
amounting  to  $140. 

Tr.  5.    A.  D.  Wilt  pays  us  $40  in  Cash  on  account. 

Tr.  6.    We  sell  a  bill  of  Books  to  R.  C.  Spencer  for  $37. 

Tr.  7.  R.  C.  Spencer  sends  us  an  $80  New  York  Draft, 
indorsed  in  our  favor,  for  his  credit  in  account. 

Tr.  8.  The  Draft  received  from  Spencer  we  indorse  to 
C.  E.  Cady,  and  send  it  to  him  for  our  credit. 

Tr.  9.  We  fill  R.  C.  Spencer's  order  for  $60  worth  of 
Mdse. 

Tr.  10.  R.  C.  Spencer  sends  us  his  Draft  on  C.  E. 
Cady,  in  our  favor,  for  $50,  which  Cady  accepts  on  acct. 

Tr.  11.    R.  C.  Spencer  pays  us  $10  in  Cash. 

Tr.  12.  We  pay  C.  E.  Cady  the  balance  his  due  in 
Cash.    What  are  the  balances  to  these  several  accounts? 

Note. — This  Example  requires  entries  to  each  of  four  separate 
accounts,  to-wit:— R.  C.  Spencer,  Cash,  A.  D.  Wilt,  and  C.  E.  Cady. 
Some  of  the  Transactions  require  entries  to  two  accounts. 


16  COMPLETE  BOOK-KEEPING. 

Atis.  R.  C.  Spencer's  account  has  a  Dr.  balance  of  $2. 
A.  D.  Wilt's  has  a  Dr.  balance  of  $8.  They  owe  us  these 
sums.  We  have  $78  in  Cash,  this  being  the  Dr.  balance. 
C.  E.  Cady's  account  balances. 


DOUBLE-ENTRY   BOOK-KEEPING. 

27.  Double-entry  Book-keeping  is  a  method  of  keep- 
ing accounts  based  upon  the  fact  that  whenever  one 
person  or  thing  becomes  Dr.  some  other  person  or  thing 
becomes  Cr.  in  like  amount.  It  recognizes  both  of  these 
relations  as  existing  in  all  transactions,  and  so  records 
them  as  to  make  the  Dr.  amounts  arising  from  them, 
whether  belonging  to  one  or  more  titles  of  account,  just 
equal  to  the  Cr.  amounts  thus  arising,  whether  belong- 
ing to  one  or  more  titles  of  account.  It  opens  a  set  of 
books  in  equation.  Each  transaction  is  so  recorded  as 
to  add  equal  sums  to  both  sides  of  it,  and  thus  keep  the 
accounts  arising  from  the  transactions  of  a  business  in 
perpetual  equilibrium,  from  beginning  to  end. 


ILLUSTRATIVE  EXAMPLES. 

28.  Example  1.— We  sell  to  John  Smith  a  bill  of  Mer- 
chandise for  $40  in  Cash.  As  John  Smith  pays  for  what 
he  buys,  he  does  not  become  Dr. ;  but  Cash,  which  is 
received  in  payment,  is  Dr.  (Art.  3),  and  Merchandise, 
which  is  given  in  exchange  for  it,  is  Cr.  (Art.  4).  Such 
transactions  are  usually  written  in  account  as  follows: 

Cash  Dr.  $40. 

To  Merchandise  640. 

This  entry  does  not  mean  that  Cash  is  Dr.  to  Merchan- 
dise.    By  the  transaction  wo  acquire  a  right  to  one  kind 


DOUBLE- ENTRY.  17 

of  property  by  relinquishing  our  claim  to  another  kind 
of  property.  The  entry  simply  implies  that  the  Cash  re- 
ceived^ and  becoming  ours  at  the  cost  of  the  Merchandise 
given  in  exchange  for  it,  is  Dr. ;  while  the  Merchandise 
given^  which  makes  the  Cash  received  ours,  is  itself  Cr. 
for  the  value  it  brings  us.  The  "To"  before  Merchandise, 
implies  that  this  account  is  Cr.  But  were  both  the  "Dr." 
and  the  "To"  omitted,  it  would  still  be  understood  that 
Cash,  at  the  lejt^  is  Dr.,  and  that  Merchandise,  at  the 
right^  is  Cr. 

Should  $40  worth  of  Merchandise  be  sold  to  John 
Smith  on  account^  he  would  be  Dr.  instead  of  Cash,  as 
above,  and  the  entry  would  be : 

John  Smith  Dr.  $40. 

To  Merchandise  $40. 

Another  example  may  make  this  clearer  to  the  learner. 

Example  2. — Suppose  we  owe  Henry  Brown  $25,  and 
John  King  owes  us  a  like  sum,  which  we  are  assured  he 
will  pay  us  when  requested  to  do  so.  We  may  make 
and  give  to  Brown  a  Draft  on  King,  in  Brown's  favor, 
for  the  sum  we  owe  the  latter.  The  entry  required 
would  then  be: 

Henry  Brown  Dr.  $25. 

To  John  King  $25. 

Which  does  not  mean  that  Brown  is  Dr.  to  King.  The 
real  meaning  of  the  above  entry  is  this  : 

Henry  Brown  is  Dr.  to  us  for  $25. 

We  are  Dr.  To  John  King  for  $25. 

But  as  the  books  are  ours,  we  should  not  write  in  them 
our  relation  to  others,  but  the  relation  of  others  to  our- 
selves, which  is  done  as  first  entered  above,  or  by  omit- 
ting the  words  here  entered  in  italics. 

Note.— We  here  present  the  form  of  Draft  which  might  properly 
be  used  in  this  example. 
B.  K.-2. 


18  COMPLETE  BOOK-KEEPING. 

S25.00.  (Date)     Place,  Month,  Day,  Year. 

At  sight  pay  to  the  order  of  Henry  Brown  Twenty- 
five  Dollars,  and  charge  to  account  of 

To  John  King.  The  Student. 

29.  In  each  of  the  preceding  examples,  two  titles  of 
account  have  arisen,  one  of  which  has  been  Dr.  and 
the  other  Cr.,  the  Dr.  and  Cr.  amounts  being  the  same 
in  every  case.  Often,  however,  transactions  give  rise 
to  three,  four,  five,  or  more  titles  of  account;  but  the 
amount  of  all  the  Dr.  titles  arising  from  a  transaction, 
must  always  exactly  equal  the  amount  of  all  the  Cr.  titles 
arising  from  it,  although  the  number  of  Dr.  titles  may 
be  more  or  less  than  the  number  of  Cr.  titles.  There 
may  be: — 

1.  One  Dr.  title  and  one  Cr.  title,  as  above. 

2.  One  Dr.  title  and  two  or  more  Cr.  titles. 

3.  Two  or  more  Dr.  titles  and  one  Cr.  title. 

4.  Two  or  more  Dr.  titles  and  two  or  more  Cr.  titles. 

5.  Any  number  of  Dr.  titles  and  any  number  of  Cr. 
titles. 

We  here  submit  a  few  illustrative  examples. 


TRANSACTIONS  AND  ENTRIES. 

Example  1.  One  Dr.  title  and  one  Cr.  title. 

We  buy  8240  worth  of  Merchandise  and  pay  in  Casli. 

Entry  of  this  Example. 

Merchandi8e  Dr.  $240. 

To  Cash  $240. 

Example  2.  One  Dr.  title  and  two  Cr.  titles. 
We  hold  a  Note  for  $400,  which  is  paid  in  Cash,  with 
$12  for  Interest  on  same. 


DOUBLE-ENTRY  EXEMPLIFIED.  19 

Entry  of  this  Example. 
Cash  Dr.  $412. 

To  Bills  Receivable  $400. 

"    Interest  12. 

Example  3.   Two  Dr.  titles  and  one  Cr.  title. 
We   pay    a    Note    for   $500,    with    Interest    on   same 
amounting  to  $25. 

Entry  of  this  Example. 

Bills  Payable  Dr.  $500. 

Interest  25. 

To  Cash  $525. 


Example  4.  Two  Dr.  titles  and  two  Cr.  titles. 

We  sell  $180  worth  of  Merchandise  and  a  Village  Lot 
worth  $300,  receiving  in  payment  $250  in  Cash  and  a 
Note  for  $230. 

Entry  of  this  Example. 
Cash  Dr.  $250. 

Bills  Receivable  2.30. 

To  Merchandise  $180. 

"    Real  Estate  300.     . 

Example  5.  Several  Dr.  titles  and  several  Cr.  titles. 

We  buy  of  Thomas  Brown  $80  worth  of  Merchandise, 
a  Village  Lot  for  $240,  and  Fuel  for  the  store  for  $100. 
We  give  in  payment  a  Note  we  hold  against  him  for 
$375,  with  $25  of  Interest  due  on  same;  and  one  bbl. 
of  Flour  worth  $8:  balance  on  account. 

Entry  of  this  Example. 


Merchandise  Dr. 

$  80. 

Real  Estate 

240. 

Expense 

100. 

To  Bills  Receivable 

$375. 

"   Interest 

25. 

"    Merchandise 

8. 

"   Thomas  Brown 

12. 

20  COMPLETE  BOOK-KEEPING. 

30.  The  writing  of  transactions  so  as  to  indicate  the 
titles  of  account  that  are  Dr.  and  the  titles  that  are  Cr., 
with  the  proper  sums  attached  to  the  several  titles  thus 
arising,  as  shown  in  the  preceding  examples,  is  called 
Journalizing,  the  Journal  being  the  book  employed  for 
this  purpose.     (Art.  52.) 

TITLES   OF  ACCOUNTS. 

31.  Titles  of  Accounts  are  the  names  by  which  our 
accounts  are  known.  (Art.  18.)  In  Double-entry,  we 
keep  accounts  with  all  persons  with  whom  we  deal, 
with  every  kind  of  property  we  possess  or  become  in- 
terested in,  with  expenses  incurred  in  conducting  the 
business,  with  profits  and  losses  arising  in  the  business, 
and  so  on.  Suitable  titles  must  therefore  be  employed, 
as  required  by  the  nature  of  the  business. 

32.  Personal  Accounts  are  accounts  kept  with  per- 
sons. Each  such  account  bears  the  name  of  the  person 
with  whom  it  is  kept.  In  case  of  Firms  or  Companies, 
the  titles  employed  are  the  names  under  which  they 
transact  business.  When  the  name  is  not  sufficient  to 
identify  a  person  or  firm,  the  location  should  be  added. 

33.  Stock  is  the  title  of  account  employed  to  represent 
the  person  or  company  that  conduct  business.  Stock 
does  not  mean  'property^  but  the  owner  or  oioners  of  prop- 
erty, who  may  also  have  debts  to  pay.  In  opening  the 
books  for  a  business,  the  several  kinds  of  property  be- 
longing to  the  business  are  each  Dr.,  under  its  proper 
title,  to  Stock  for  the  amount  of  the  whole ;  and,  if  there 
be  any  debts  to  be  paid,  Stock  is  Dr.  for  the  amount  of 
them  to  the  Persons  owed,  to  Bills  Payable,  or  to  who- 
ever or  whatever  represents  the  claim. 

34.  Firm  Name  is  the  name  under  which  several  per- 
sons join  to  carry  on  business,  and  generally  consists  of 


TITLES  OF  ACCOUNTS.  21 

the  names  of  the  persons  composing  the  Firm,  or  of  one 
or  more  of  them  and  Co. ;  as,  Smith  and  Brown,  or 
Smith,  Brown  &  Co.,  as  the  case  may  be.  While  the 
firm  is  thus  known  to  others,  the  word  Stock  is  em-  * 
ployed  to  represent  the  firm  in  its  own  books  of  account. 
The  Stock  Account  is  then  Cr.  for  the  assets  of  the  firm, 
and  Dr.  for  its  liabilities,  and  will  have  a  Cr.  balance 
for  the  Firm's  net  investment  in  business,  unless,  as  is 
sometimes  done,  each  partner  is  made  Cr.  for  his  assets 
and  Dr.  for  his  liabilities,  instead  of  keeping  a  Stock 
Account. 

Note. — Any  member  of  a  firm  may  deal  with  the  Firm,  buying  of 
it  or  selling  to  it,  the  same  as  other  parties,  the  account  with  each 
member  of  the  firm  so  dealing  being  kept  in  his  own  name.  In  such 
cases,  the  net  profit  or  loss  of  the  business  for  a  given  time  may  be 
closed  into  Stock  or  to  the  individual  members  composing  the  Firm, 
as  they  may  agree. 

35.  Merchandise  is  the  title  of  account  employed  to 
represent  any  and  all  kinds  of  property  belonging  to 
us,  bought  and  sold  for  gain.  It  usually  includes  Dry 
Goods,  Groceries,  Hardware,  Wheat,  Flour,  etc.,  embrac- 
ing whatever  one  deals  in,  and  is  made  Dr.  for  its  cost, 
and  Cr.  for  the  receipts  from  sales.  When  the  Cr.  side 
of  the  account  is  in  excess,  the  difference  represents 
Profit;  when  the  Dr.  side  is  in  excess,  a  Loss.  When  a 
person  deals  in  one  thing,  as  Wheat  or  Flour,  the  name 
of  the  thhig  dealt  in  is  often  used  as  the  title  of  the  ac- 
count instead  of  Merchandise. 

36.  A  Consignment  is  property  received  by  us  from  an- 
other, to  be  sold  on  his  account  and  risk.  The  Consignee 
does  not  himself  buy  such  property,  but  receives  it  to 
sell  for  the  Consignor.  The  title  of  the  account  usually 
combines  the  name  of  the  Consignor  and  Consignment, 
thus :  John  Smith's  Consignment.  Consignments  are  Dr. 
for  charges  paid  and  services  rendered  on  their  account, 
and  finally  for  their  net  proceeds,  when  ascertained  and 


22  COMPLETE  BOOK-KEEPING. 

paid  to  the  Consignor  or  entered  to  his  credit  in  account. 
T?hey  are  Cr.  for  receipts  from  sales. 

37.  A  Shipment  is  property  sent  by  us  to  another,  to 
be  sold  on  our  account  and  risk.  The  title  of  the  account 
usually  combines  Shipment  and  the  name  of  the  person 
to  whom  sent,  the  place  to  which  sent,  or  both,  thus: 
ShipTTient  to  Jay  Cooh,  or  Shipment  to  Boston.  Shipments 
are  Dr.  for  the  invoice  price  of  property  so  sent  away, 
including  shipping  charges  (if  any)  paid  by  the  Con- 
signor; and  Cr.,  on  receiving  an  account  sales  from  the 
Consignee,  for  their  net  proceeds,  when  for  gain  or  loss 
they  properly  close  into  the  Profit  and  Loss  Account. 

38.  Expense  is  the  title  under  which  an  account  of 
the  expenses  incurred  in  conducting  a  business  is  kept; 
such  as  freight,  store  rent,  clerk  hire,  fuel,  lights,  etc. 
It  includes  all  expenses  connected  with  a  business  that 
do  not  more  properly  belong  to  some  other  account. 

Note. — In  case  one  wishes  to  know  the  cost  of  Advertising  his 
business,  of  Stationery  used  in  it,  of  Fuol  and  Lights,  or  of  any 
class  of  Expense,  he  may  keep  an  account  with  them  severally,  con- 
sidering each  such  account  as  a  branch  of  the  Expense  account.  All 
such  accounts  are  Dr.  for  their  cost,  and  Cr.  for  any  thing  sold  from 
them ;  but  generally  they  liave  no  Cr.  entry  until  closing  the  books 
for  profit  or  loss. 

39.  Real  Estate  includes  all  fixed  property,  as  houses 
and  lands,  and  is  Dr.  for  its  cost,  and  Cr.  for  what  it 
brings.  On  closing  the  account,  at  any  time,  for  profit 
or  loss,  it  is  Cr.  for  the  actual  worth  of  what  remains  on 
hand. 

Note — Any  outlay  for  the  permanejit  improvement  of  Real  Estate 
properly  belongs  t^)  the  Dr.  side  of  this  account;  while  any  sums 
paid  for  the  temporan/  benefit  of  such  property  in  conducting  a  par- 
ticular businc.s.s,  would,  in  the  records  of  that  business,  properly  be- 
long on  the  Dr.  side  of  the  Expense  Account. 

40.  Cash  is  the  title  of  one's  account  with  money,  and 
with  what  are  known  as  Cash  items;  as,  bank  checks, 


TITLES  OF  ACCOUNTS.  23 

sight  drafts,  etc.,  which  are  payable  in  money  when 
called  for.  This  title  does  not  include  notes  and  drafts 
that  become  due  and  payable  at  some  future  day^  but 
simply  Cash  and  Cash  items  in  hand. 

Note. — The  Cash  account  does  not  properly  include  our  credit  in 
bank,  althougli  such  credit  may  be  realized  at  any  time  by  check. 
When  we  deposit  money  in  bank,  tlie  Bank  becomes  Dr.  and  Cash 
Cr.  Sums  so  deposited  cease  to  belong  to  our  Cash  account,  and 
enter  into  our  Bank  Account. 

41.  Bank  Accounts  are  kept  under  the  names  of  the 
Banks  with  which  we  deal.  The  Bank  becomes  Dr.  for 
our  deposits  in  it,  and  Cr.  for  our  checks  drawn  upon  it. 

Note. — Our  transactions  with  Banks  are  properly  in  writing. 
When  our  deposits  are  made,  whether  in  Cash  or  cash  items,  they 
are  described  on  a  deposit  check  made  by  us,  giving  tlie  name  and 
sum  of  each  item,  and  the  amount  of  the  whole,  and  the  amount 
is  entered  by  a  bank  officer  in  our  deposit  book.  And,  when  we 
want  money  from  the  bank,  we  write  and  sign  our  application  for 
it  in  a  paper  called  a  check,  stating  the  sum  asked  for,  and  to  whom 
we  wish  it  paid.  These  precautions  are  wise,  guard  against  errors, 
and  protect  both  banks  and  depositors  in  their  just  rights. 

42.  Bills  Receivable  include  all  Notes,  Drafts,  and 
Acceptances  which  we  hold  against  others,  on  which  we 
are  entitled  to  receive  payment  at  some  future  day. 

Note. — When  such  papers  are  received,  they  cost  us,  and  are  Dr. 
for  their  face  value.  If  we  give  less  than  this  for  them,  Discount 
(or  other  proper  title)  is  Cr.  for  the  difference.  When  such  papers 
are  paid,  they  are  made  Cr.  for  their  face  value.  If  the  payment 
exceeds  this,  Interest  is  Cr.  for  the  excess.  When  the  payment  is  less 
than  the  face,  Discount  or  Profit  and  Loss  is  properly  made  Dr.  for 
the  difference,  as  will  be  apparent  when  we  come  to  use  them. 

43.  Bills  Payable  include  all  Notes  of  ours  and  Drafts 
of  others  on  us  whicli  we  accept  and  promise  to  pay  at 
some  future  time. 

Note. — When  Notes  are  given,  or  Drafts  are  "accepted"  (a  virtual 
promise  to  pay),  they  serve  us,  and  are  hence  Cr.  for  their  jace  value. 
When  they  mature,  or  become  due,  and  are  paid,  they  cost  us,  and 
are  hence  Dr.  for  their /ace  value.    Whenever  the  sum  given  or  re- 


24  COMPLETE  BOOK-KEEPING. 

ceived  for  either  Bills  Receivable  or  Bills  Payable,  is  more  or  less 
than  their  face  value,  the  difference  is  entered  to  Interest,  Discount, 
or  Profit  and  Loss,  as  the  case  requires.  Tlie  gain  or  loss  resulting 
from  handling  Bills,  being  entered  in  our  accounts  with  Interest  and 
Discount,  constitutes  these  speculative,  while  the  accounts  with  Bills 
themselves,  are  non-speculative.    (Arts.  15  and  16.) 

44.  Interest,  as  commonly  defined,  is  the  sum  paid  by 
the  borrower  to  the  lender  for  the  use  of  money.  But, 
strictly,  Interest  is  the  use  of  money. 

Note.— Suppose  we  loan  $1000  for  a  term  of  years  on  a  note  bear- 
ing annual  interest  at  6  per  cent.  At  the  end  of  one  year  we  re- 
ceive $60  for  interest.  What  we  receive  is  Cash,  which  comes  to  us 
in  exchange  for  the  use  of  the  $1000  loaned,  which  use  is  Interest. 
This  is  why  Cash,  the  thing  received  is  Dr.,  while  Interest,  the  thing 
given  in  exchange  for  it,  is  Cr.  The  Interest  account  is  Dr.  when 
we  pay  others  for  the  use  of  money  borrowed,  and  Cr.  when  we  re- 
ceive pay  from  others  for  the  use  of  money  loaned.  The  Interest 
account,  like  other  accounts,  is  Dr.  when  we  give  value  for  it,  and 
Cr.  when  we  receive  value  on  its  account. 

45.  Discount  is  Interest  paid  in  advance,  or  a  deduc- 
tion from  an  account,  or  from  a  price  asked.  The  ac- 
count is  kept  on  the  same  principle  as  Interest,  as  ex- 
plained in  Art.  44. 

Note. — Storage,  Commission,  and  Insurance,  are  titles  of  accounts 
required  to  be  kept  in  some  branches  of  business;  but  the  general 
principles  of  Dr.  and  Cr.,  which  have  been  fully  elucidated,  apply  to 
these,  and  to  all  other  accounts  we  may  have  occasion  to  keep. 

46.  Profit  and  Loss  is  the  title  of  the  account  em- 
ployed for  giving  a  condensed  statement  of  the  j)rojits 
and  losses  connected  with  one's  business. 

Note. — The  Profit  and  Loss  account  is  not  itself  speculative,  and 
contains  neither  the  profits  nor  tlie  los.ses  of  the  businea**,  but  simply 
mecLsures  of  them.  The  profits  themselves  appear  among  the  Assets 
of  the  business,  and  constitute  a  part  of  them,  while  the  losses  are 
represented  in  its  Liabilitie.s,  or  consist  of  values  that  have  been 
parted  with  in  conducting  the  business.  The  measures  of  these 
profits  and  lo8.ses  are  first  indicated  by  the  speculative  accounts  that 
have  given  rise  to  them,  and  arc  thence  transferred  to  tlsis  account 
in  the  process  known  as  closing  the  Ledger,  shown  in  Arts.  61  to  65. 
But  first  in  order  we  should  consider  Account  Botiks. 


BOOKS  OF  ACCOUNT.  25 


BOOKS   OF  ACCOUNT. 

47.  Account  Books  are  books  used  for  keeping  one's 
accounts.  The  number  and  kind  of  books  required  for 
use  by  any  person  must  depend  upon  the  nature  and 
extent  of  his  business. 

Note. — In  a  simple  and  limited  business  where  personal  accounts 
only  are  kept,  the  Ledger  is  sometimes  the  only  book  used.  As  a 
business  is  extended,  a  Day  Book,  a  Journal,  a  Bill  Book,  and  a  Cash 
Book  become  necessary.  Besides  these,  a  Sales  Book,  an  Invoice  Book, 
and  sometimes  other  books  are  needed.  A  Time  Book  and  various 
other  books  are  required  in  some  businesses.  The  names  of  books 
are  often  sufficient  of  themselves  to  indicate  their  uses. 

48.  The  Day  Book  contains  a  concise  history  of  one's 
business  transactions,  whether  with  few  or  many  per- 
sons, written  up  under  tiie  date  and  in  the  order  of 
their  occurrence,  and  arranged  with  reference  to  con- 
venience in  journalizing. 

Note  1. — The  Day  Book  should  begin  with  a  brief  and  clear  state- 
ment of  all  property,  of  whatever  sort,  which  is  put  into  the  busi- 
ness, followed  by  an  enumeration  of  outstanding  notes  or  debts  of 
any  character  which  are  to  be  met  by  the  business.  Then  follow 
the  transactions  as  they  occur.  When  several  items  of  a  transaction 
belong  to  the  debit  or  credit  of  the  same  account,  they  should  be  so 
entered  as  to  give  their  sum  for  use  in  making  the  Journal  entry. 

Note  2. — The  Day  Book,  the  Journal  Day  Book,  and  the  books 
defined  in  the  next  three  paragraphs,  being  books  of  original  entry, 
should  be  carefully  written  up  at  the  time,  to  render  them  admissi- 
ble as  testimony  in  court,  in  case  of  litigation.  In  a  limited  busi- 
ness, the  Day  Book  may  properly  contain  both  the  sales  and  the  pur- 
chases of  the  business.  When  these  become  extensive,  a  separate 
book  may  be  employed  for  each. 

49.  The  Sales  Book  contains  the  names  and  residence 
of  persons  to  whom  sales  are  made,  with  a  description 
of  the  kind,  amount,  and  value  of  the  property  sold,  and 
the  time  of  payment,  where  a  credit  is  allowed.  (See 
page  98.)  When  the  Invoices  furnished  purchasers  are 
copied  in  a  Letter  Book,  this  book  may  be  considered 


26  COMPLETE  BOOK-KEEPING. 

as  a  part  of  the  Sales  Book,  and  sales  so  copied  may  be 
transferred  thence  to  the  Journal  or  Ledger.  Where  the 
Cash  transactions  of  a  business  are  extensive,  it  is  con- 
venient to  record  them  in  a  separate  book,  known  as  the 
Cash  Book. 

50.  The  Cash  Book.  This  book  may  properly  contain 
a  record  of  all  Cash  received,  whether  from  sales,  from 
notes  falling  due,  for  services  rendered,  or  for  any  other 
consideration;  and  of  all  sums  paid  for  whatever  pur- 
pose. It  is  hence  a  Cash  Book  and  a  Ledger  for  Cash. 
It  is  likewise  a  Journal  for  accounts  on  which  moneys 
are  received  or  paid. 

51.  The  Invoice  Book,  as  its  name  implies,  contains 
Invoices  of  Mercliandise  bought.     (See  page  99.) 

Note. — This  book  may  be  made  by  copying  invoices  received,  or 
by  pasting  the  Invoices  themselves  into  a  book  prepared  for  this  pur- 
pose. The  latter  method  is  preferable.  It  then  becomes  a  book  of 
original  entry,  and  is  admissible  as  evidence  of  the  accuracy  of  one's 
accounts. 

52.  The  Journal  is  a  book  in  which  the  transactions 
first  written  in  the  Day  Book,  the  Sales  Book,  or  the 
Invoice  ''Book  are  so  entered  as  to  make  the  sum  of  the 
amounts  opposite  the  Dr.  titles  equal  the  sum  of  the 
amounts  opposite  the  Cr.  titles,  and  to  facilitate  their 
transfer  to  the  proper  side  of  their  respective  accounts 
in  the  Ledger. 

Note. — When  the  first  entry  of  a  transaction  has  been  in  one  of 
the  above-named  books,  and  the  Journal  refers,  by  page  or  date,  to 
the  book  in  which  it  was  first  written,  every  entry  of  the  Ledger 
can  be  traced  through  the  Journal  to  the  book  of  "original  entry" 
upon  which  the  evidence  of  its  accuracy  chiefly  rests. 

63.  The  Journal  Day  Book,  as  its  title  implies,  com- 
bines with  the  Journal  tlio  essential  facts  commonly  re- 
corded in  a  Day  Book,  so  as  to  make  this  one  book  serve 
the  double  purpose  of  Journal  and  Day  Book.  Hence 
it  is  preferred  by  many. 


BOOKS  OF  ACCOUNT.  27 

64.  Rules  for  Journalizing. — In  writing  up  the  Jour- 
nal, the  principles  of  Double-entry,  as  stated  in  Arts. 
27  to  29,  must  be  observed.  Whenever  one  or  more 
persons  or  things  become  Dr.,  one  or  more  other  per- 
sons or  things  become  Cr.  in  like  amount.  The  prin- 
ciples stated  in  Arts.  3  and  4  enable  us  to  determine 
what  titles  are  Dr.  and  what  are  Cr.  More  specific  rules 
can  hardly  be  given.  But  many  are  aided  in  the  ap- 
plication of  these  rules,  and  in  remembering  them,  by 
the  homely  verse  following: 

"  By  Journal  laws  what  we  receive 
Is  Debtor  made  to  what  we  give. 
Stock  for  our  debts  must  Debtor  be, 
And  Creditor  for  property. 
Profit  and  Loss  accounts  are  plain ; 
We  debit  Loss  and  credit  Gain." 

55.  Posting  is  transferring  accounts  from  the  Journal, 
Cash  Book,  and  sometimes  from  other  books,  through 
which  they  are  scattered,  to  the  Ledger,  and  arranging 
those  with  the  same  person  or  of  the  same  title  on  a 
folio  by  themselves,  with  proper  reference  figures  in  the 
books  posted  from,  showing  the  page  in  the  Ledger  to 
which  the  items  are  carried,  and,  in  the  Ledger,  show- 
ing the  book  and  page  from  which  an  item  is  brought. 

Note  L — To  avoid  mistakes,  it  is  well  first  to  select  a  place  in  the 
Ledger  for  the  account  to  be  kept,  then  write  its  title  under  the 
proper  letter  in  the  Index,  with  the  page  on  which  it  is  to  be  kept. 
Next,  write  the  title  of  the  account  in  a  clear  and  plain  hand,  cen- 
trally, on  the  upper  blue  line  of  the  Ledger  heading,  and  you  are 
ready  to  begin  posting. 

Note  2. — Where  there  are  but  a  few  entries  to  an  account,  it  is 
often  found  desirable  to  divide  a  page  and  enter  a  second  short  ac- 
count in  the  space  usually  allotted  to  one.  In  such  case,  double  red 
lines  should  be  ruled  entirely  across  the  page,  midway  between  the 
regular  blue  lines,  say  three  or  four  lines  below  where  the  other  ac- 
count closed.  Then  write  the  title  of  the  account  to  be  opened  here 
on  the  first  blue  line  above  the  red  rulings,  and  the  year  on  the  line 
next  below. 


28  COMPLETE  BOOK-KEEPING, 

Note  3. — The  year  should  always  first  be  entered  on  opening  an 
account,  and  on  bringing  it  down  or  carrying  it  forward.  Then  should 
follow  the  month,  the  day  of  the  month,  the  description  (if  any), 
the  folio  of  the  book  from  which  you  post,  and  the  amount.  In  the 
book  from  which  you  post,  the  folio  of  the  Ledger  to  which  the  item 
is  carried  should  be  entered  immediately  after  posting  it. 

56.  The  Ledger  is  the  book  employed  for  gathering 
from  the  Journal  and  books  of  original  entry,  and  en- 
tering under  their  respective  titles,  the  Dr.  and  Cr.  sums 
belonging  to  the  several  accounts  arising  in  one's  busi- 
ness. 

Note.— In  a  very  limited  business  the  Ledger  may  be  the  only  book 
required,  as  illustrated  in  Arts.  20,  22,  and  25.  But  generally  it  is  made 
to  contain  a  summary  of  records  first  made  in  the  Day  Book,  the  Sales 
Book,  the  Cash  Book,  the  Invoice  Book,  and  sometimes  in  the  Bill  Book, 
or  Check  Book,  by  posting  directly  from  these  books  or  by  employ- 
ing the  Journal  as  a  medium  between  them  and  the  Ledger.  No  addi- 
tional data  is  furnished  in  the  Ledger.  It  contains  the  facts  pertain- 
ing to  one  account  together,  while  the  other  books  have  those  occurring 
under  one  date  together. 

We  come  now  to  consider  the  work  technically  known 
as  opening  books. 

OPENING  BOOKS. 

67.  Opening  books  is  making  the  necessary  entries 
for  indicating  the  exact  condition  of  affairs  at  the  time 
of  beginning  business  (Art.  48,  Note  1).  In  the  Jour- 
nal, the  several  kinds  of  property  carried  into  the  busi- 
ness, or  devoted  to  it,  should  each  be  made  Dr.,  under 
its  proper  title,  for  its  value,  and  Stock  should  be  made 
Cr.  for  the  amount  of  the  whole.  In  case  of  existing 
Liabilities  at  the  time,  Stock  should  be  made  Dr.  for 
their  amount  to  the  several  titles  of  account  represent- 
ing them.     (Art.  33.) 

Note.— The  Journal  may  be  opened  with  one  entry  by  making  the 
Resources  Dr.  to  the  Liabilities  and  to  Stock,  in  which  case  the  credit 
to  Stock  will  represent  the  net  invettment  in  the  business. 


TRIAL  BALANCE.  29 

58.  The  Journal  entries  for  the  current  transactions 
of  a  business  are  readily  made.  Each  transaction  gives 
rise  to  entries  to  two  or  more  accounts,  of  which  one  or 
more  is  Dr.,  and  one  or  more  Cr.  In  journalizing,  write 
first  the  titles  of  account  that  are  Dr.,  with  the  proper 
amount  opposite  each;  then  the  titles  of  account  that 
are  Cr.,  with  the  proper  amounts  opposite.  The  num- 
ber of  Dr.  titles  that  a  transaction  gives  rise  to  may  be 
more  or  less  than  the  number  of  Cr.  titles;  but  the  Dr. 
amounts,  taken  together,  must  in  all  cases  exactly  equal 
the  Cr.  amounts,  taken  together.     (Arts.  27  to  30.) 

TRIAL   BALANCE. 

59.  A  Trial  Balance,  as  its  name  implies,  is  a  trial  to 
see  if  the  accounts  of  the  Ledger  balance.  As  the  Dr. 
and  Cr.  amounts  arising  from  each  Journal  entry  are 
equal,  it  is  manifest  that  all  of  the  Dr.  amounts  for  a 
week,  a  month,  or  for  any  time,  taken  together,  must 
exactly  equal  all  of  the  Cr.  amounts,  taken  together,  for 
the  same  time.  If,  then,  we  post  the  Journal  for  any 
given  time  to  the  Ledger,  it  is  evident  the  amount  of 
the  Dr.  sides  of  all  the  accounts  of  the  Ledger  must 
exactly  equal  the  amount  of  the  Cr.  sides  of  all  the  ac- 
counts. And  as  when  any  account  is  settled  its  two  sides 
are  equal,  it  is  further  manifest  that  the  Dr.  amounts 
and  balances  of  such  accounts  as  are  unsettled,  taken 
together,  must  just  equal  the  Cr.  amounts  and  balances, 
as  illustrated  in  the  Trial  Balance  at  the  46th  page. 
Should  the  amounts  or  balances  of  the  two  sides  at  any 
time  disagree,  an  error  must  have  arisen,  which  should 
be  found  and  corrected.  Trial  balances  are  commonly 
taken  in  business  at  the  close  of  every  month,  and  often 
more  frequently.  They  enable  us  to  detect  and  locate 
mistakes  that  may  arise ;  and  the  oftener  balances  are 
taken,  the  easier  it  is  to  find  and  correct  errors. 


30  COMPLETE  BOOK-KEEPING. 

60.  In  case  the  Trial  Balance  at  any  time  indicates 
that  mistakes  have  arisen,  we  should  promptly  correct 
them.  When  a  mistake  is  indicated  by  a  Trial  Balance, 
it  must  have  arisen  since  the  last  preceding  balance  was 
taken;  so  the  more  frequently  they  are  taken,  the  less 
the  amount  of  work  to  be  examined  in  order  to  discover 
and  correct  any  mistakes  that  have  arisen.  And  it  is 
proper  to  close  one's  books  for  gain  or  loss  at  stated  in- 
tervals— annually  or  semi-annually — not  only  to  ascer- 
tain the  amount  of  profit  or  loss  that  has  arisen  during 
this  time,  but  also  that  the  books  may  show  the  true 
state  of  the  business.  When  gain  which  has  arisen  is 
left  in  the  business  the  Stock  is  increased,  and  the  books 
should  show  it.  On  the  contrary,  in  case  of  loss,  the 
diminished  Stock  Account  will  indicate  the  true  condi- 
tion of  affairs.  Whenever  we  wish  thus  to  close  a  set 
of  books,  a  Trial  Balance  and  an  Inventory  of  property 
on  hand  should  first  be  taken,  when  we  may  enter  upon 
the  work  of  closing. 

CLOSING  THE   LEDGER. 

61.  Closing  the  Ledger  is  a  systematic  method  of  as- 
certaining the  amounts,  or  measures^  of  profit  and  loss 
that  have  arisen  in  connection  with  the  various  specu- 
lative accounts  of  our  business,  and  transferring  these 
measures  from  the  accounts  that  have  given  rise  to  them 
to  the  Profit  and  Loss  Account,  and  the  balance  of  this 
account,  which  will  represent  the  net  gain  or  loss  of  the 
business  as  a  whole,  thence  to  Stock  or  to  the  stockhold- 
ers, as  the  case  may  require.  By  examining  the  several 
speculative  accounts  of  our  business  (Art.  15),  we  can 
readily  determine  the  gain  or  loss  indicated  by  each. 
After  taking  the  Trial  Balance,  preparatory  to  closing, 
we  proceed  as  follows : 

62.  The  Inventory  of  property  on  hand  belonging  to 


CLOSING   THE  LEDGER.  31 

such  speculative  accounts  as  have  inventories,  should  be 
taken,  and  the  amount  of  each  such  inventory  entered 
on  the  Cr.  side  of  the  account  in  the  Ledger  to  which 
it  belongs,  in  red  ink,  as  a  balance  belonging  to  that  ac- 
count. The  Cr.  balances  of  all  speculative  accounts  of 
the  Trial  Balance  indicate  gain.  An  inventory  belong- 
ing to  any  such  account  will  increase  the  gain  by  its 
amount.  The  Dr.  balances  of  all  speculative  accounts 
of  the  Trial  Balance  suggest  loss.  An  inventory  belong- 
ing to  any  such  account  will  decrease  the  loss  by  its 
amount;  and  when  the  Inventory  is  greater  than  the 
balance,  the  excess  will  indicate  gain.  We  are  now  pre- 
pared to  transfer  the  measures  of  gain  and  loss  from  the 
accounts  in  which  they  have  arisen,  to  Profit  and  Loss, 
which  may  be  done  in  either  of  two  ways.  In  the  use 
of  three  Journal  entries,  as  follows : 

63.  For  Profits,  make  each  and  all  accounts  indicat- 
ing gain,  Dr.  for  the  measures  of  gain  they  severally 
represent,  to  Profit  and  Loss,  for  the  amount  of  the 
whole.  This  entry,  when  posted,  will  withdraw  from 
each  speculative  account  of  the  Ledger  indicating  gain, 
the  measure  of  gain  it  has  given  rise  to,  and  place  the 
amount  of  the  whole  on  the  Cr.  side  of  the  Profit  and 
Loss  account,  thus  indicating  (with  any  gains  that  may 
have  been  previously  entered  to  this  account)  the  gross 
profits  of  the  business. 

64.  For  Losses,  make  Profit  and  Loss  Dr.  for  the  entire 
loss,  to  the  several  accounts  of  the  Ledger  indicating  loss, 
to  each  for  its  measure  of  loss.  This  entry,  when  posted, 
will  withdraw  the  loss  from  all  speculative  accounts  of 
the  Ledger  indicating  loss,  and  place  the  entire  loss  of 
the  business  on  the  Dr.  side  of  the  Profit  and  Loss  ac- 
count. The  Cr.  side  of  this  account  will  now  indicate 
the  gross  profit  of  the  business,  and  the  Dr.  side  its  gross 
loss.     Should  the  Profit  and  Loss  account  now  have  a  Cr. 


32  COMPLETE  BOOK-KEEPING. 

balance  it  will  indicate  net  gain;  but  with  a  Dr.  balance, 
net  loss.  Finally,  in  either  case,  close  the  Profit  and  Loss 
account  into  Stock.  This  third  closing  entry,  in  case  of 
gain,  will  be  Profit  and  Loss  Dr.  to  Stock;  but  in  case 
of  bsSy  Stock  Dr.  to  Profit  and  Loss. 

65.  One  Journal  Entry  may  manifestly  be  made  to 
do  the  work  of  these  tliree  in  closing,  thus:  Make  the 
several  accounts  indicating  gain  Dr.,  each  for  its  measure 
of  gain,  to  the  several  accounts  indicating  losSj  each  for 
its  measure  of  loss,  entering  the  difference  between  the 
sums  of  the  gains,  and  the  sums  of  the  losses,  directly 
to  Stock,  or  in  case  of  a  firm  or  corporation,  to  the  part- 
ners or  stock-holders,  according  to  the  terms  of  their 
compact. 

66.  Advantages.  This  method  of  Closing  the  Ledger, 
in  the  use  of  Journal  entries,  instead  of  transferring  the 
gains  and  losses  of  the  business  from  several  accounts 
of  the  Ledger  to  others,  without  the  use  of  such  entries, 
has  two  marked  advantages: 

1.  It  avoids  occasion  for  the  use  of  red  ink  entries, 
except  for  balances  and  Inventories  (which  are  balances), 
and  never  requires  more  than  one  red  ink  entry  to  an 
account;  and 

2.  It  gives  better  protection  against  errors  in  the  proc- 
ess of  closing  the  Ledger,  by  placing  the  gains  and  losses 
of  the  business,  with  the  net  result  of  the  whole,  at  once 
before  the  eye  for  examination,  as  in  the  case  of  Journal 
entries  generally. 

LEDGER  BALANCES. 

67.  All  Trial  Balances,  properly  taken,  exhibit  the 
balances  of  the  Ledger  accounts  at  the  time  they  are 
taken.  While  a  business  is  in  progress,  with  its  ever- 
changing  measures  of  gain  and  loss  in  the  speculative 


DIAGRAM  FOR  CLOSING  LEDGER. 


33 


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CLOSE  INTO 


PROFIT  AND  LOSS,  which  closes  into  STOCK. 


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CLOSE  INTO 


LEDGER  BALANCES, 

— — ^— — ^— — ^  OF  WHICH    — ^_^._i.... 


OUR  ASSETS,  ^C/  NET  STOCK  and  LIABILITIES. 


B.  K.— 3. 


34  COMPLETE  BOOK-KEEPING. 

accounts  in  which  they  have  arisen,  such  balances  are 
properly  known"  as  Trial  Balances,  being  taken  to  deter- 
mine the  accuracy  of  our  work.  But  when  we  pause  in 
our  work,  with  a  view  to  determining  the  net  result  of 
our  business  for  a  given  period  of  time,  or  at  its  close, 
by  eliminating  all  measures  of  gain  and  loss  from  the 
speculative  accounts  in  which  they  have  arisen,  and 
entering  the  net  result  to  Stock,  the  resulting  balances 
may  in  a  special  sense  be  considered  Ledger  Balances, 
for  such  Dr.  balances,  taken  together,  including  Inven- 
tories brought  forward,  represent  our  Assets,  and  such 
Cr.  balances  represent  our  net  Stock  and  Liabilities.  This 
movement  and  result  are  beautifully  indicated  in  the 
diagram  on  page  33. 


FIRST  ILLUSTRATIVE  SET. 

68.  In  this  Set,  we  omit  dates,  and  employ  numbers 
from  1  to  15  to  represent  the  recorded  transactions,  or 
Day  Book  entries,  which  appear  on  the  left  pages,  with 
the  Journal  entries  based  upon  them,  and  bearing  the 
same  numbers  opposite.  The  numbers  employed  in  the 
Ledger  likewise  refer  to  the  corresponding  numbers  of 
the  Journal  upon  which  the  Ledger  entries  are  based. 
This  is  done  for  convenience  of  reference  in  explana- 
tions offered. 

69.  The  first  twelve  entries  of  the  Day  Book  are  all  that 
relate  to  the  business  transacted.  These  the  learner  will 
do  well  to  write  up,  in  Day  Book  form,  on  Journal  paper, 
(having  two  sets  of  money  columns,)  and  from  this  write 
the  Journal  and  post  it  to  the  Ledger.  The  money 
columns  of  the  Day  Book  are  used  for  short  and  full 
extensions  without  regard  to  the  left  being  for  Dr.  and 
the  right  for  Cr.,  as  in  the  Journal.  In  entry  1  of  the 
Day  Book,  the  three  accounts  making  up  the  Resources 


FIRST  ILLUSTRATIVE  SET.  36 

are  short  extended.  Their  sum,  when  full  extended,  con- 
stitutes the  Cr.  to  Stock.  But  in  entry  2  all  that  is 
sold  belongs  to  one  account,  and  is  therefore  full  ex- 
tended, while  the  Cash  received  and  the  sum  remaining 
as  a  debt  against  Smith,  are  short  extended.  And  here, 
as  the  Cash  received  consists  of  two  items,  (currency 
and  a  check.  Art.  40)  that  together  belong  to  the  same 
account,  the  items  may  be  entered  outside  of  the  money 
columns,  as  shown  in  the  Day  Book.  But  instead  of 
only  the  word  "  Merchandise,"  $400,  as  here  given,  there 
should  be  entered  in  the  Day  Book  the  items  sold,  and 
the  quantity  and  price  per  yard,  pound,  etc.  of  each  such 
item,  which  together  go  to  make  up  the  amount  given, 
thus : — 

35  Bbls.  Flour  @  $5.50       $192.50 

2000  lbs.      Brown  Sugar  "   8c.  160. 

95    "        Black  Tea  *'   50c.  47.50      $400 

Unless  a  separate  Sales  Book  is  kept,  in  which  case  the 
Day  Book  would  not  repeat,  but  would  simply  refer 
to  the  page  of  the  Sales  Book  where  the  items  might 
be  found,  as  will  be  hereafter  illustrated.  And  so  gener- 
ally ;  for  to  establish  a  claim  for  property  sold,  we  must 
be  able  to  give  a  description  of  it  as  here  indicated,  and 
this  should  be  made  at  the  time  of  the  sale,  either  in 
the  Day  Book  or  in  a  Sales  Book,  that  may  be  referred  to. 
In  case  of  Merchandise  bought,  the  reference  would  be  to 
an  Invoice  Book,  or  to  an  Invoice  by  number,  if  on  file. 

70.  In  entry  5  of  the  Day  Book,  a  part  of  the  pay 
received  is  an  Order  made  by  Jno.  Cook  on  F.  Brown 
in  our  favor  for  ^120,  which  may  be  in  form  as  follows : 

$120.  Place,  Month,  Day,  Year. 

Pay  to  The  Student  One  Hundred  and  Twenty  Dol- 
lars and  charge  to  my  account. 

To  F.  Brown.  John  Cook. 


36  COMPLETE  BOOK-KEEPING. 

In  journalizing,  we  therefore  make  Brown  Dr.  for  this 
sum,  retaining  the  Order  as  our  authority  for  so  doing. 
Should  Brown  refuse  payment,  the  Order  becomes  a  claim 
against  Cook,  the  maker.  In  entry  6,  S8  of  the  cash  re- 
ceived is  for  the  use  or  Interest  of  the  $200  represented 
by  the  Note  we  have  held.  (Art.  44.)  The  reason  for 
the  6th  Journal  entry  is  hence  manifest.  In  entries  7 
and  9  of  the  Day  Book,  there  being  but  one  sale,  or  pur- 
chase, it  is  in  each  case  full  extended,  and  although 
entered  but  once  in  the  Day  Book,  it  in  each  case  belongs 
equally  to  two  accounts,  as  shown  by  the  Journal  entries. 
To  indicate  that  a  Day  Book  entry  is  journalized,  a  check 
may  be  made  in  left  margin,  as  shown  in  first  entry, 
page  40. 

71.  When  Journal  entries  1  to  12  inclusive  are  posted, 
the  Ledger  will  have  the  form  presented  on  pages  44 
and  45  at  this  stage  of  the  work;  that  is,  when  entries  1 
to  12,  which  represent  the  business  transactions  of  the 
Set,  have  been  made,  and  before  the  three  Journal  en- 
tries for  closing  have  been  made  and  posted.  The  ac- 
counts with  Bills  Receivable  and  with  F.  Brown  have 
been  settled;  the  Profit  and  Loss  Account  has  not  yet 
been  opened ;  and  entries  13, 14,  and  15,  afterward  posted 
to  this  account  and  to  Merchandise,  Interest,  Expense, 
and  Stock,  have  not  yet  been  made.  All  of  this  will 
become  plain  to  the  student  by  his  doing  the  work  him- 
self according  to  these  instructions.  As  the  accounts 
with  Bills  Receivable  and  F.  Brown  each  balance,  they 
may  be  ruled  off  and  closed,  as  shown,  when  we  may 
proceed  to  take  a  Trial  Balance  (Art.  59),  omitting  the 
two  accounts  closed.  The  result  will  be  as  shown  on 
page  46,  which  indicates  that  the  work  has  been  cor- 
rectly performed  so  far. 

72.  In  closing  the  Ledger,  after  having  taken  the  Trial 
Balance,  we  proceed  as  directed  in  Arts.  61  to  64.     In 


FIRST  ILLUSTRATIVE  SET.  37 

this  Set  the  only  Inventory  we  have  is  of  Merchandise, 
amounting  to  $220,  which  we  enter  on  the  Cr.  side  of 
this  account,  in  red  ink.  There  is  a  Cr.  balance  to  this 
account,  as  shown  by  the  Trial  Balance,  of  $130,  which 
represents  a  gain;  to  which  add  the  value  of  the  Inven- 
tory, $220,  and  we  have  a  gross  gain  on  Merchandise  of 
$350;  and  the  Cr.  balance  of  Interest  shows  a  gain  of  $5 
from  this  account.  These  two  measures  of  gain  are,  by 
entry  13,  transferred  from  these  two  accounts  to  the  Cr. 
of  the  Profit  and  Loss  Account,  now  first  opened. 

73.  We  have  examined  the  two  speculative  accounts  of 
the  Trial  Balance  indicating  gain,  and  transferred  their 
measures  of  gain  to  the  Cr.  side  of  Profit  and  Loss. 
Expense,  which  is  speculative,  and  whose  Dr.  balance  is 
$45,  is  the  only  account  indicating  loss,  or  diminishing 
the  gain.  By  entry  14  this  account  is  balanced,  and  its 
measure  of  loss  transferred  to  the  Dr.  side  of  the  Profit 
and  Loss  Account.  The  Cr.  side  of  Profit  and  Loss  now 
represents  the  gross  gain  of  the  business,  and  its  Dr.  side 
shows  the  gross  loss,  or  expense  of  conducting  it.  The 
difference  between  the  sides  gives  the  net  gain  of  the 
business,  which,  by  entry  15,  is  transferred  to  the  Cr. 
side  of  the  Stock  Account,  thus  indicating  the  net  re- 
sult and  present  state  of  the  business.  The  entries  in 
the  Day  Book,  here  numbered  13,  14,  and  15,  it  will  be 
understood,  would  not  be  made  in  actual  work,  but  only 
the  Journal  entries  based  on  these  statements,  which 
are  here  given  as  aids  to  a  clear  comprehension  of  what 
is  usually  considered  difficult,  and  are  designed  to  indi- 
cate the  line  of  thought  in  making  the  closing  Journal 
entries. 

74.  The  last  three  entries  of  the  Journal  relate  to 
measures  (or  amounts)  of  gain  and  loss  resulting  from 
this  business,  not  to  the  matter  of  gain  or  loss.  The 
measure  of  gain  on  Merchandise  here  is  $350;  while  the 


38  COMPLETE  BOOK-KEEPING. 

gain  itself,  or  the  matter  of  gain,  is  made  up  of  Cash 
and  personal  accounts,  as  appears  from  entries  2,  5,  7, 
and  12;  and  the  Interest  Account  shows  a  measure  of 
gain,  the  matter  of  which  consists  of  Cash,  as  appears 
from  entries  6  and  10;  while  the  Expense  Account  shows 
a  measure  of  loss,  which  arose  from  Cash  paid  out,  as 
shown  by  entries  4  and  9.  Entry  15  simply  transfers 
to  the  Cr.  side  of  the  Stock  Account  the  measure  of  net 
gain  resulting  from  the  business,  as  shown  by  the  Profit 
and  Loss  Account,  but  the  matter  of  gain  belongs  to  the 
accounts  of  the  Ledger  having  Dr.  balances.  The  ac- 
counts now  remaining  open  constitute  the  face  of  the 
Ledger,  and  are  brought  together  at  the  46th  page  as 
Ledger  Balances. 

Note. — As  explained  in  Art.  65  the  work  of  the. three  Journal 
entries  in  closing  might  have  been  performed  by  one,  as  shown  at 
the  foot  of  page  43. 

75.  It  is  worthy  of  special  mention  that  the  Assets  of 
this  Set,  on  closing,  consist  of  the  various  accounts  of 
the  Ledger  Balances  which  have  Dr.  balances,  together 
amounting  to  $1510,  including,  of  course,  the  Inventory 
to  Merchandise  which  has  been  brought  down  in  the 
Ledger  in  black  ink,  thus  indicating  that  it  is  a  balance 
on  hand,  unsold;  while  the  Liabilities  consist  of  the 
accounts  with  Cr.  balances,  except  Stock.  The  Liabili- 
ties in  this  Set,  on  closing,  consist  of  $300  of  Bills  Pay- 
able, leaving  $1210  of  Net  Stock.  The  Assets,  or  the 
property  held,  it  will  be  seen,  is  just  enough  to  pay  the 
Liabilities  and  leave  $1210  worth  of  property  free  to  the 
proprietor,  here  represented  by  the  Cr.  balance  to  the 
Stock  Account. 

Note  1.— Great  care  should  be  taken  to  avoid  mistakes.  But  in 
case  at  any  time  an  erroneous  entry  has  been  made,  it  may  be  cor- 
rected by  a  counterbalancing  entry,  if  the  nature  of  the  case  will 
admit  of  it.  Era-sures  or  interlineations  should  be  avoided.  They 
vitiate  books  of  original  entry,  or  throw  suspicion  on  them.  It  may 
sometimes  become   necessary  to  mark   an   erroneous  entry  "void," 


FIRST  ILLUSTRATIVE  SET.  39 

with  such  explanations  as  the  case  may  call  for,  and  give  a  refer- 
ence to  the  place  where  the  correct  entry  may  be  found. 

Note  2. — Where  entries  have  been  omitted  in  Day  Book  or  Journal, 
they  should  be  made,  when  observed,  as  "omissions,"  and  posted 
under  correct  date. 


NOTEWORTHY  PARTICULARS. 

The  next  seven  pages  (pp.  40  to  46)  present  the  work 
of  the  First  Illustrative  Set  to  which  the  explanations 
from  Arts.  68  to  75  relate. 

The  Journal  entries,  it  will  be  observed,  are  numbered 
to  correspond  with  the  Day  Book  entries  opposite  them, 
upon  which  they  are  based. 

The  Ledger  entries  are  likewise  numbered,  to  show  the 
Journal  entries  that  produced  them. 

The  Trial  Balance  on  page  46  should  be  taken  when 
the  first  twelve  entries  of  the  Journal  have  been  posted 
to  the  Ledger. 

The  Ledger,  as  here  written  up,  is  closed  in  the  use 
of  three  Journal  entries,  numbered  13,  14,  and  15. 

In  case  the  Ledger  is  closed  by  one  Journal  entry,  as 
shown  at  the  foot  of  pages  42  and  43,  the  Ledger  would 
be  as  here  shown,  without  the  Profit  and  Loss  account. 

The  column  at  the  left  of  the  money  columns  of  the 
Ledger  is  designed  for  entering  the  folio  of  the  Journal 
from  which  the  sums  posted  are  brought,  as  will  be  illus- 
trated further  on. 

The  columns  headed  L.  F.  (Ledger  Folio)  in  the  Trial 
Balance  and  Ledger  Balances,  show  the  folios  of  the 
Ledger  upon  which  these  several  accounts  are  writ- 
ten up. 


40 


COMPLETE  BOOK-KEEPING. 


I>A.Y  BOOK, 


let  Set. 


We  commence  business  this  day  with  the 
following  Assets: — 
Merchandise  in  Store  per  Inventory 
A  Note  against  J.  Brown  for 
Cash  in  Safe  (Art.  67) 


Sell  H.  Smith  Merchandise 
Receive  Cash 

Balance  on  acct. 


(Art.  69) 

Currency  $100 
Check         150 


Buy  Merchandise, 
Give  our  Note  for 
Pay  balance  in  Cash 


Invoice  No.  1 


Pay  Cash  for  freight  on  Mdse.  (Art.  38) 


Sell  Jno.  Cook  Merchandise 

Receive  Cash 

His  Order  on  F.  Brown  for 


600 
200 
100 


250 
160 


3601 
1401 


180 
120 


900 


400 


500 


40 


300 


Receive  Cash 

For  J.  Brown's  Note 

Interest  on  same 


Sell  F.  Brown  Mdse.  on  acct. 


8 


80 


Take  up  our  Note  for 
Interest  on  same 
Pay  Cash 


865 


FIRST  ILLUSTRATIVE  SET. 


41 


1st  Set. 


JOTIRN^Xj. 


Merchandise  Dr. 

Bills  Receivable 
Cash 


Expense 


Cash 


To  Stock 


Cash  Dr. 

H.  Smith 


To  Merchandise 


Merchandise  Dr. 


To  Bills  Payable 
"    Cash 


Dr. 


To  Cash 


Cash  Dr. 

F.  Brown 


To  Merchandise 


Dr. 


To  Bills  Receivable 
Interest 


F.  Brown  Dr. 


To  Merchandise 


Bills  Payable  Dr. 

Interest 


To  Cash 


600 
200 
100 


250 
150 


500 


40 


180 
120 


208 


80 


360 
6 


900 


400 


140 


40 


300 


200 
8 


80 


42 


COMPLETE  BOOK-KEEPING. 


IDAY  BOOK. 


let  Set. 


9 


Pay  Cash  for  Stationery 


10 


Receive  Cash  of  F.  Brown,  in  full  of  acct. 
Interest  on  same 


11 


i  Buy  Merchandise  Invoice  No.  2 

!  Give  in  payment  our  Note 
i  Our  Draft  on  H.  Smith 


12 


Sell  Merchandise  for  Cash 


200 
2 


300 
100 


202 


400 


850 


Inventory. — We  have  on  hand  Mdse.  worth,  per  Inventory,  $220. 
This  is  treated  as  directed  in  Art.  62,  which  see. 


13 

This  is  not  a  business  transaction,  but  simply  transfers  the  meas- 
ures of  gain  from  the  speculative  accounts  to  the  Cr.  of  Profit  and 
Loss. 

14 

This  transfers  the  measure  of  loss  from  the  only  account  indicating 
loss,  to  the  Dr.  side  of  Profit  and  Loss. 

16 

Having  brought  the  measures  of  gain  and  loss  from  all  speculative 
accounts  into  Profit  and  Loss,  this  transfers  the  net  gain  to  Stock. 


One  Journal  entry,  as  shown  opposite,  would  have  accomplished 
the  same  result  as  the  three  Journal  entries,  13  14,  and  15,  and  here 
without  a  Profit  and  Loss  account  (none  having  been  opened),  as  ex- 
plained in  Art.  65. 


FIRST  ILLUSTRATIVE  SET. 


43 


1st  Set. 


JOURNA.L. 


Expense 


Cash 


Cash 


Dr. 


To  Cash 


10 


Dr. 


To  F.  Brown 
"    Interest 


11 


Merchandise  Dr. 


To  Bills  Payable 
"    H.  Smith 


12 


Dr. 


To  Merchandise 


13 


Merchandise  Dr. 

Interest 


To  Profit  and  Loss 


14 


Profit  and  Loss        Dr. 


To  Expense 


15 


Profit  and  Loss        Dr. 


To  Stock 


Merchandise 
Interest 


Dr. 


To  Expense 
"  Stock 


I    ' 
I    \ 
5 

202 

[ 
i 

I 

400 

I 

! 

I 
850  1 


350 

5 


200 
2 


300 
100 


850 


45 


310 


350 
5 


355 


45 


310 


45 
310 


44 


COMPLETE  BOOK-KEEPING. 


Dr. 


LEDGrE3R. 

Stock 


1st  Set. 
Or. 


To  Balance 


1210 

] 

\ 

I2IU 

- 

! 

1 
15 

By  Sunds. 
"    Profit  &  Loss 

900 
310 

;i2ro 

"~ 

By  Balance 

ji210 

Dr. 


Mbkchandisk 


Or. 


II  To  Stock 
3'  "   Sunds. 

11    "     do. 

13    "   Profit  & 


To  Balance 


eOOi 
500 
400 
350! 

1850 


220 


2 1  By  Sunds. 
5    "      do. 


F.  Brown 

Cash 

Inventory 


1 

400 
300 

80 
850 
220 

1850 

Dr. 


Cash 


Or. 


1 

2 

6 

6 

10 

12 

To  Stock 
"   Mdse. 
"     do. 
"  Sunds. 
"     do. 
"  Mdse. 

1 

100 
260 
180 
208 
202 
850 

1 

4 
8 
9 

By  Mdse. 

"    Expense 
"    Sunds. 
"   Expense 

~ 

Il40 

40 

365 

6 

1240 

1790 

1750 

To  Balance 

1240 

Dr. 


To  Mdse. 


To  Balance 


H.  Smith 


160 

m 
"so 


& 


By  Draft 


Or. 


100 

SO 

130 


FIRST  ILLUSTRATIVE  SET. 


45 


1st  Set. 
Dr. 


1  To  Stock 


LKDGtER. 
Bills  Receivable 


m 


6  By  Cash 


O. 


200 


Dr. 


Bills  Payable 


Or. 


To  Cash 

"    Balance 


360 

3 

300 

11 

660 

1 

1 

By  Mdse. 
"     do. 


By  Balance 


300 
660. 

300 


Dr. 


Expense 


Or. 


To  Cash 
"     do. 


14 


By  Profit  &  lioss 


45 


45 


Dr. 


F.  Beown 


Or. 


To  Mdse. 
"     do. 


120 

xJ 

80 

200 

By  Cash 


200 
"200 


Dr. 


Interest 


Or. 


To  Cash 
"   Profit  &  Loss 


By  Cash 

"     do. 


46 


COMPLETE  BOOK-KEEPING. 


LEID  GrER. 

Is 

t  Set. 

Dr.                                Profit  and  Loss                                  O. 

• 

1 
14  To  Expense 

""!'. 

13 

By  Sunds. 

'     !|355 

15    "   Stock 

1 

310 
_355 

=z 

^ 

J55 

-- 

Dr.                                 Trial  Balance.                                  Or. 

}. 

Amounts. 

Balances. 

Sto 

Accounts.            Ii.F. 

Balances. 
900' 

Amounti 

1 

ck                            44 

900 

1500 

Merchandise             44 

130 

1630 

1790 

1240; 

Cash                           44 

550 

150 

1        601 

H.  Smith                 i  44  ! 

100 

360 

i 

Bills  Payable             45  1 

300 

660 

45 

45' 

Expense                   i  45  | 

1 

5 

'                    1 

Interest 

45 

s!      ! 

10 

3850 

13351        1 

1        i 

1330 

3850 

— ' 

Dr. 

Ledger  Balances. 

O. 

Accounts. 

L.P. 

Amounts. 

Accounts. 

V 

Amounts. 

Merchandise 

44 

220i 

Stock 

I 
44 

1210 

Cash 

44 

1240 

Bills  Payable 

145 

300 

H.  Smith 

44 

50 

mo 

^^^^ 

i 

-"" 

"' 

_JL51Q 

COMMERCIAL  PAPERS. 


76.  Commercial  Papers  are  papers  employed  among 
business  men  in  eonducting  commercial  transactions, 
and  include,  particularly,  all  written  evidences  of  debt; 
as.  Notes,  Drafts,  Accei)tances,  Bills  of  Exchange,  Cer- 
tificates of  Deposit,  Bank  Checks,  etc. 


COMMERCIAL  PAPERS.  47 

Note. — We  give  definitions  of  tliose  in  common  use,  exhibit  forms 
of  papers  employed  in  the  business  transactions  herein  written  up, 
indicate  the  relations  and  obligations  of  the  several  parties  thereto, 
the  manner  and  effect  of  indorsements,  and  acceptances,  etc. 

77.  A  Note  is  a  written  promise  to  pay  a  certain  sum 
of  money,  at  a  certain  time,  to  a  person  named,  to  the 
order  of  a  person  named,  or  to  the  bearer,  signed  by  the 
person  promising. 

Note  1. — A  Note  may  be  wholly  printed,  or  partly  written  and 
partly  printed.  It  may  be  written  with  ink  of  any  color,  or  with 
pencil,  and  on  paper  or  other  material,  as  the  maker  prefers  or  finds 
convenient.    Good  paper  and  ink  and  a  plain  signature  are  desirable. 

Note  2. — A  Note  is  not  complete  without  the  signature  of  the 
promisor,  who  is  hence  known  as  its  maker.  The  person  named  in 
a  note,  to  whom,  or  to  whose  order  the  promise  of  payment  is  made, 
is  the  payee.  The  payee  of  a  note  by  a  written  order  across  its  back 
may  direct  its  payment  to  another  person,  who  becomes  the  indorsee, 
and  possesses  the  rights  of  the  original  payee. 

Note  3. — A  Negotiable  note  is  one  that  may  be  bought  and  sold, 
and  thus  have  different  owners  at  different  times,  who  shall  possess 
the  right  of  enforcing  collection  at  maturity  in  their  own  name.  This 
requires  that  they  be  drawn  payable  to  order  or  bearer.  Notes  drawn 
with  order  \n  them,  as  in  Forms  Nos.  1,  3,  and  5  following,  are  nego- 
tiable; that  is,  they  admit  of  being  sold  but  require  indorsement,  as 
illustrated  in  Forms  Nos.  3  and  4,  where  Henry  Cook  was  the  payee, 
but  by  indorsement  John  Clarkson  becomes  the  indorsee,  and  rightful 
owner.  Notes  with  bearer  written  in  them,  instead  of  order,  are  nego- 
tiable without  indorsement. 

78.  The  Note  in  Form  No.  1,  although  negotiable,  was 
held  by  the  payee  until  due  and  paid,  when  it  was 
properly  indorsed,  as  shown  in  Form  No.  2,  the  payees 
acknowledging  payment  over  their  signature ;  while  the 
Note  in  Form  No.  3  was  conveyed  to  John  Clarkson,  as 
indorsee,  who,  when  it  became  due  and  was  paid,  re- 
ceipted it  as  shown  in  Form  No.  4. 

Note. — The  Notes  in  Forms  Nos.  3  and  5,  although  having  the  same 
maker,  have  different  payees ;  but  by  sale  and  indorsement  they  have 
the  same  indorsee,  to  wliom  payment  is  made  when  they  become  due, 
as  shown  in  Tr.  8,  of  the  Second  Set,  following.    No.  3  was  on  Inter- 


48  COMPLETE  BOOK-KEEPING. 

est,  and  its  wording  properly  so  shows;  but  No.  5  says  nothing  of 
Interest,  and  of  course  bears  none. 

79.  Where  payable.  Notes  ought  generally  to  show 
where  they  are  payable.  When  this  is  not  stated,  they 
are  understood  to  be  payable  where  made,  at  the  maker's 
place  of  business  or  at  his  residence. 

Note  1. — A  proper  presentation  of  notes,  drafts,  and  acceptances, 
at  their  maturity,  to  their  makers  or  acceptors,  is  necessary  to  secure 
the  holder's  claim  upon  subsequent  parties,  in  case  they  are  not  paid 
when  due. 

Note  2. — The  Note  in  Form  No.  1  is  payable  at  the  office  of  the 
payee,  while  those  of  Forms  Nos.  3  and  5  are  payable  at  the  office 
of  the  makers.  But  notes  are  very  commonly  made  payable  at  the 
Banks  where  their  makers  keep  their  Bank  Accounts,  as  in  Form  No. 
7.  This  Note,  although  given  to  Wm.  Clark  &  Co.,  has  been  by  them 
indorsed  to  the  Bank  where  it  is  made  payable.  In  this  case  it  was 
given  for  a  valuable  consideration,  as  appears  from  Tr.  6,  of  Second 
Set,  and  may  have  been  discounted  for  Clark  &  Co.  by  the  Bank  where 
it  is  made  payable.  At  all  events,  it  is  paid  at  maturity,  as  shown  by 
Tr.  25,  of  Second  Set,  and  is  returned  to  the  makers,  properly  re- 
ceipted, as  shown  in  Form  No.  8  following. 

80.  A  Check  is  an  order  addressed  to  a  bank  by  a  de- 
positor, requesting  the  payment  of  money  to  the  bearer, 
to  a  person  named  in  the  check,  or  to  his  order. 

Note  1.— Checks  should  be  drawn  only  by  persons  having  money 
to  their  credit  in  account  in  the  bank,  and  when  so  drawn  they  are 
payab'e  on  presentation.  This  being  the  case,  they  are  generally 
given,  received,  and  held,  as  money. 

Note  2. — Benefits  often  result  from  the  use  of  checks  made  payable 
to  the  order  of  the  payee,  for  he  is  required  to  indorse  them  before 
the  bank  pays  them.  As  the  bank  returns  all  checks  it  pays  to  their 
makers,  those  made  payable  to  the  order  of  a  payee  named,  and  in- 
dorsed by  him,  when  returned  by  the  bank  to  their  maker  become  in 
his  hands  receipts  of  payment. 

Note  3. — Persons  presenting  checks  for  payment,  or  for  their  credit 
in  account  at  bank,  are  generally  required  to  indorse  them,  even  when 
made  payable  to  bearer. 

81.  A  Draft  is  a  written  order  addressed  by  one  person, 
firm,  or  corporation  to  another,  requesting  the  payment 


COMMERCIAL  PAPERS.  40 

of  a  specified  sum  of  money  to  a  party  named  in  the 
draft,  or  to  his  order;  but  sometimes  to  the  bearer. 

Note. — The  person  who  makes  and  signs  a  Draft  is  known  as  its 
maker,  or  drawer.  The  party  to  whom  the  Draft  is  addressed  is  the 
drawee.  The  one  to  whom  it  is  made  payable  is  the  payee.  An  in- 
dorsement by  a  payee  to  another  party,  constitutes  the  latter  indorsee. 

82.  An  Acceptance  is  a  time  Draft  accepted.  Drafts 
made  payable  at  a  certain  time  after  date  or  sight,  are 
known  as  tiTne  Drafts,  and  should  be  presented  by  the 
payee  to  the  drawee  for  acceptance,  which  is  indicated  by 
the  drawee's  writing  the  word  "Accepted"  across  their 
back  or  face  (usually  the  latter  and  in  red  ink),  and  sign- 
ing his  name,  when  they  are  known  as  Acceptances,  and 
with  the  drawee  and  acceptor  are  Bills  Payable,  the  maker 
virtually  becoming  indorser.  With  the  payee  and  holder 
they  are  Bills  Receivable,  while  with  the  maker  they  are 
neither,  but  simply  give  him  occasion  to  make  the  payee 
Dr.  and  the  drawee  Cr. 

Note  1. — In  case  a  Draft  is  made  payable  a  certain  number  of  days 
"after  sight,"  the  acceptance  should  be  dated.  When  drawn  payable 
on  presentation  or  at  sight,  payment  renders  a  formal  acceptance  un- 
necessary. Form  No.  11  presents  a  time  draft,  indorsed  by  its  maker, 
as  required  by  its  wording,  and,  when  paid  at  maturity,  receipted  by 
the  holder,  as  shown  at  No.  12. 

Note  2. — The  maker  of  a  Draft  sometimes  procures  its  acceptance 
by  the  drawee  before  offering  it  to  the  payee.  This  is  especially  true 
of  accommodation  paper,  described  in  Art.  88. 

83.  A  Bank  Draft  is  a  draft  drawn  by  one  banking 
house  upon  another,  and  usually  upon  one  in  some  other 
city  or  part  of  the  country,  requesting  the  payment  of  a 
specified  sum  of  money  to  a  person  named  in  the  draft, 
or  to  his  order. 

Note. — Bank  Drafts  are  much  employed  in  the  payment  of  debts 

owing  to  persons  in  other  places,  without  the  actual  transmission  of 

money.    To  illustrate:   We  hold  A.  H.  Hinman's  Note,   shown   in 

Form  No.  1  (Bills  Receivable  No.  3),  which  comes  due  Dec.  3d,  with 

Interest,  together  amounting  to  $281.40,  and  payable  at  our  office. 

Anticipating  its  maturity,  Hinman  on  the  1st  day  of  Dec.  procures 
B.  K.— 4. 


50 


COMPLETE  BOOK-KEEPING. 


the  Draft  shown  in  Form  No.  9,  and  sends  it  to  us  with  his  indorse- 
ment upon  it,  shown  at  No.  10,  as  stated  in  Tr.  29.  When  it  reaches 
us  we  receipt  his  Note,  as  shown  in  Form  2,  and  return  it  to  him, 
retaining  the  Draft,  which  we  use  as  money. 

84.  Deposit  Checks  are  slips  for  the  use  of  depositors  in 
describing  the  funds  offered  by  them  to  banks  for  deposit. 

Note  1. — The  deposit  we  make  in  the  National  Bank  Dec.  8th  is  here 
shown,  including  the  draft  described  in  Tr.  35.  We  therefore  now  indorse 
the  draft  as  shown  in  Form  No.  10.  As  the  draft  had  to  pass  through 
the  mail  in  reaching  us,  Hinman's  indorsement  to  us  was  properly /mW, 
while  our  indorsement  for  deposit  in  the  bank  may  be  open,  as  shown  in 
Form  10. 


THE   1T^TI01T-A.Ij  BjA.2^3C. 
Deposited  by 

I.,   i^e^-C'.    8 J  1884. 


Detroit,  Mich. 


/eoo 
Bes 

B8I 


BI5000 


eo 


Note  2.— Deposit  Checks  are  retained  by  tlie  bank  for  itt  protec- 
tion as  to  both  the  kinds  and  amount  of  funds  deposited. 

86.  The  Deposit  Book  is  a  small  book  furnished  by 
the  bank  to  the  depositor,*  in  which  his  deposits  are 
entered  by  the  bank. 


♦The  subject  of  banks  and  banking  is  fully  discussed  in  the  author's 
*•  University  Book-keeping,"  in  v/hich  deposit  books,  check  books,  and 
yarious  other  forms  are  shown. 


COMMERCIAL  PAPERS.  61 

Note  1. — The  Deposit  Book  is  held  by  the  depositor,  and  consti- 
tutes receipts  for  his  deposits  from  time  to  time  made. 

Note  2. — At  the  end  of  each  month  the  Deposit  Book  should  be 
returned  to  the  bank  for  its  entry  in  it  of  the  Checks  which  it  has 
paid,  which  are  then  returned  with  the  book  to  the  depositor. 

86.  A  Bill  of  Exchange  is  another  name  for  a  Draft. 
Such  Bills  are  usually  somewhat  more  formal  than  drafts, 
and  are  generally  drawn  in  duplicate,  two  together  con- 
stituting a  Set,  so  that,  in  case  one  of  a  Set  is  lost  the 
other  may  be  used.  The  first  one  of  a  Set  presented  is 
generally  paid,  when  the  other  becomes  void,  and  is 
valuable  only  as  a  voucher. 

Note. — Bills  of  Exchange  payable  in  the  same  country  where 
drawn  are  known  as  Domestic  Exchange,  while  such  Bills  payable 
in  another  country  are  known  as  Foreign  Exchange. 

87.  An  Indorsement  is  the  writing  of  one's  name  on  the 
back  of  a  note,  draft,  or  other  written  instrument,  with  or 
without  other  words,  and  is  an  implied  agreement  to  pay 
the  same  in  case  the  principal  debtor  fails  to  do  so. 

Note  1. — An  open  indorsement,  by  writing  one''s  name  only,  as  in 
the  second  indorsement  on  Forms  10  and  14,  conveys  the  property  of 
the  paper,  or  the  right  to  it,  to  any  rightful  owner  having  it  in  pos- 
session, as  though  the  paper  had  been  drawn  payable  to  the  bearer. 
Notes  and  drafts  with  open  indorsements  should  therefore  be  guarded 
with  care,  and  ought  never  to  be  intrusted  to  the  mails. 

Note  2. — The  payee  may  sell  a  note  or  draft  to  any  one  by  indors- 
ing it  to  the  order  of  that  person,  as  done  in  Forms  4,  6,  8,  and  10,  fol- 
lowing. Such  indorsements  are  called  full,  and  convey  the  property 
of  the  paper  to  the  person  named  in  the  indorsement. 

Note  3. — Any  holder  of  a  note  or  draft  with  an  open  indorsement 
may  convert  it  into  a  full  or  special  one  by  writing  the  usual  limiting 
words  over  the  indorser's  name. 

Note  4.— The  person  to  whose  order  a  note  or  draft  is  made  pay- 
able, on  receiving  payment  from  the  maker,  should  receipt  it  by 
writing  on  it  "Paid,"  or  "Received  payment,"  and  signing  his  name, 
when  it  has  no  further  value  except  as  a  receipt. 

88.  Accommodation  Paper  is  a  term  applied  to  notes 
and   drafts   for   which    one   of  the  parties   thereto   has 


52  COMPLETE  BOOK-KEEPING. 

received  no  consideration,  but  has  lent  his  name  as  maker, 
indorser,  or  acceptor,  to  accommodate  the  other,  by  in- 
creasing the  security  of  payment  in  the  hands  of  a  third 
party.  Such  paper  is  made  for  the  purpose  of  enabling 
another  to  borrow  money,  or  for  the  security  of  a  debt. 

Note  1. — As  between  the  original  parties  there  has  been  no  con- 
sideration, there  can  be  no  obligation  of  payment  by  the  party  lend- 
ing his  name.  But  in  the  hands  of  a  third  party  both  are  bound 
alike. 

Note  2. — There  is  no  peculiarity  in  the  form  of  accommodation 
paper.  The  Note  in  Form  No.  7,  following,  was  given  for  a  valuable 
consideration  (Tr.  6),  and  the  makers  are  therefore  bound  to  pay  it  at 
maturity.  Should  they  fail  to  do  so,  the  holder  will  look  to  the  in- 
dorsers.  But  the  same  form  might  be  used  as  an  accommodation  Note 
in  case  either  the  makers  or  the  indorsers  wanted  to  raise  money  for 
their  own  use.    And  so  of  the  Draft,  Form  No.  11. 

Note  3. — The  drawer  might  arrange  with  the  drawees  and  accept- 
ors for  the  use  of  their  name  for  the  drawer's  benefit,  with  the  under- 
standing that  he  would  pay  the  draft  at  maturity.  In  all  such  cases 
the  party  accommodated  should  take  care  of  such  paper  at  maturity. 
But  in  case  of  his  failure  to  do  so,  the  other  party  is  bound,  for  his 
name  was  lent  to  make  the  paper  good. 

89.  Days  of  Grace  are  three  additional  days  allowed 
under  the  common  law  for  the  payment  of  commer- 
cial paper  after  the  time  named  in  the  paper  for  its 
maturity. 

Note  1. — By  special  enactment  in  some  of  the  states,  days  of  grace 
are  not  allowed.  In  other  states,  grace  is  not  allowed  on  notes,  drafts, 
or  bills,  payable  at  sight,  on  demand,  or  without  time.  The  tendency 
of  the  times  seems  to  favor  their  disallowance  altogether.  It  is  con- 
sidered equitable  and  just  to  expect  men  to  meet  their  promises  of 
payment  when  and  as  they  agree. 

Note  2. — Legal  liolidays  are  uniformly  excepted  in  the  maturity 
of  comnfercial  paper.  Where  grace  is  not  allowed,  paper  falling  due 
on  a  holiday  becomes  legally  due  the  day  following;  but  where  grace 
w  allowed,  on  the  preceding  day.  In  this  work,  notes  and  drafts  are 
considered  as  becoming  due  and  payable  at  the  time  named  in  them 
for  maturity. 

Note  3. — The  word  irumth  means  a  calendar  month,  which  varies  in 
length  from  28  to  31  days.    When  reckoned  from  any  day  of  any 


INTRODUCTION  TO  SECOND  SET.  63 

month  it  extends  to  the  same  day  of  the  month  next  following,  provid- 
ing the  latter  month  has  the  requisite  number  of  days;  otherwise  it 
terminates  with  the  last  day  of  the  month. 

Note  4. — Except  in  special  connection,  as  just  shown,  a  month  is 
considered  as  thirtj'^  days,  and  interest  is  computed  on  any  given 
number  of  months  as  so  many  twelfths  of  a  year,  and  on  any  given 
number  of  days  as  so  many  thirtieths  of  a  month. 


INTRODUCTION   TO   SECOND   SET. 

90.  Having  given  the  general  form  of  the  Day  Book 
in  the  First  Illustrative  Set,  we  present  the  Transactions 
of  the  Second  Set  in  common  language  for  the  student 
to  write  up  in  Day  Book,  Journal,  and  Ledger  form, 
taking  a  Trial  Balance  at  the  end  of  the  first  month 
(Art.  59),  and  again  at  the  end  of  the  second  month, 
before  closing  the  books  for  ascertaining  the  net  result 
of  the  business.  And  that  the  learner  may  enter  upon 
his  work  more  satisfactorily,  and  more  readily  compre- 
hend its  details,  we  write  up  the  first  month's  Day  Book, 
Journal,  and  Ledger  for  him,  and  exhibit  the  principal 
papers  used,  that  the  relations  of  the  several  parties  to 
these  papers  may  be  better  understood. 

91.  Although  the  first  month's  work  is  here  written 
up  and  explained,  and  thus  made  illustrative,  the  learner 
will  more  thoroughly  comprehend  it  by  writing  it  up 
himself,  as  though  not  here  done,  thus  making  it  for 
himself  an  example  for  practice.  He  may,  however,  first 
properly  study  this  work  in  connection  with  the  ex- 
planations here  offered ;  but  when  he  undertakes  writing 
it  up  himself,  he  should  do  so  as  independently  as  pos- 
sible, consulting  these  explanations  only  as  he  would  a 
teacher.  When  he  has  thus  written  up  the  first  month's 
work  in  the  Day  Book  and  Journal,  posted  it  to  the 
Ledger,  taken  his  Trial  Balance,  and  brought  forward  his 


54  COMPLETE  BOOK-KEEPING. 

balances  in  the  Ledger,  he  may  proceed  in  like  manner 
with  the  second  month's  work,  and,  at  its  close,  again 
take  a  Trial  Balance,  before  closing  the  Ledger  (Art.  61) 
for  determining  the  profits  and  losses  of  the  business, 
and  its  net  result  as  a  whole. 

92.  By  examining  the  Assets  and  Liabilities  at  the 
beginning  of  the  Second  Set  (pp.  60-61),  and  referring 
to  Art.  57,  relating  to  opening  books,  the  learner  will 
readily  see  how  our  Assets  give  rise  to  the  first  opening 
entry  of  the  Journal,  and  our  Liabilities  to  the  second. 
The  Bills  Receivable  on  hand,  and  others  that  may  be 
received,  are  entered  in  the  Bill  Book,  to  which  the 
learner  is  referred  for  the  manner  of  keeping  it.  The 
Bill  Payable  out  against  us,  and  others  that  may  be 
issued,  are  likewise  recorded  in  this  book.  The  jour- 
nalizing of  the  transactions  that  follow  will  generally 
be  readily  understood  by  comparing  the  Transactions 
with  the  entries  of  the  Day  Book  based  upon  them,  and 
referring  to  the  principles  stated  in  Art.  54,  and  to  the 
Arts,  therein  referred  to.  In  several  of  the  Transactions 
reference  is  made  to  a  Sales  Book,  which  ought  gener- 
ally to  be  kept.  But  as  in  this  Set  the  amounts  are 
given,  they  may  be  accepted,  and  the  Day  Book  writ- 
ten up  accordingly.  The  other  important  references 
and  illustrations  being  so  numerous,  the  presentation 
of  a  Sales  Book  is  deferred  until  the  Third  Set. 

93.  It  may  seem,  from  Tr.  6  (Nov.  4),  that  Real  Estate 
should  at  once  be  made  Dr.  for  the  improvements  made 
upon  it.  But  the  work  here  done  is  by  contract.  We 
therefore  debit  the  contractor  for  payments  made  until 
the  work  is  completed  and  accepted,  Tr.  43  (Dec.  20), 
when  we  debit  Real  Estate  for  the  contract  price  and 
credit  the  contractor.  In  Tr.  7  (Nov.  4),  and  other  sim- 
ilar ones,  it  was  not  necessary  to  say  our  Check  was  on 
the  National  Bank,  for  we  had  credit  in  no  other,  and 


COMMERCIAL  FORMS.  65 

a  Check  without  a  deposit  for  its  payment  would  be 
fraudulent.  In  Tr.  8  (Nov.  5),  it  will  be  seen  that  John 
Clarkson,  to  whom  we  sell  Merchandise,  holds  two  of  our 
Notes  (Bills  Payable  Nos.  1  and  2),  shown  at  Forms  Nos. 
3  and  5,  both  indorsed  to  him  and  now  due,  and  pre- 
sented by  him  for  payment.  The  Notes  and  Interest 
therefore  cost  us  the  Merchandise  we  sell  and  our  Check 
for  the  balance,  hence  the  Journal  entry  of  this  date. 
In  Tr.  12  (Nov.  10),  had  there  been  any  interval  between 
receiving  this  Draft  and  depositing  it,  there  would  neces- 
sarily have  been  two  entries,  first  to  cover  the  sale,  and 
then  to  cover  the  deposit,  but  by  making  the  deposit  at 
once,  one  entry  may  cover  the  entire  transaction.  The 
Draft  received  by  us  Tr.  20  (Nov.  18),  is  indorsed  to  us^ 
as  shown  in  Forms  Nos.  13  and  14,  and  by  us  in  open 
indorsement  when  deposited  in  bank.  In  making  our 
Draft  on  Frank  Goodman,  Tr.  23  (Nov.  22),  we  examine 
his  account  and  ascertain  the  amount  our  due.  We  draw 
on  him  to  the  order  of  the  National  Bank  in  which  we 
deposit  the  Draft  for  our  credit  in  account,  Form  No.  15. 


COMMERCIAL  FORMS. 
No.  1. — A  Note  on  Interest  and  Neqotiablk 


f ^80.00  Detroit,  Mich.,  ylo-^v-^cyyM-^eA^  3cL,  1884. 

uIl/LAJou^  J-ycuj^^ after  date„..ty.... promise  to  pay 

c/t^cw  Wijci'^^^eyuj^  j^ .or  order, 

Uvj-o^  jA^<^^^'t^6t'£^  CLAt^  &i^uAyu^. Dollars, 

with  interest  at  6  per  cent,  at  their  office  in  Detroit. 
Value  received, 


56  COMPLETE  BOOK-KEEPING. 

No.  2. — Reverse  of  No.  1,  Paid  and  Receipted. 


No.  3. — A  Note  on  Interest  and  Negotiable. 


f^JJ.JS  Detroit,  Mich., J(a^  5t>L, 1884, 

__ 0ty)O  vi^yo-^yiJCu^^. after  date, 

for  value  received, lo^'C^. promise  to  pay  to  the  order  of 

Di-'C^i.A.^   '\Oo-<^iL',. at  our  office  in  Detroit, 

%Ju)-<}-  J^pcc-K^c^t^e^  ^CA>--^yKA^=^c^^j.-cy%i^.J.^^  Dollars, 
with  interest  at  6  per  cent. 


No.  4. — Reverse  of  No.  3,  with  Full  Indorsement. 


COMMERCIAL  FORMS.  57 

No.  5. — A  Negotiable  Note  without  Interest. 


f  if 5 5. 00  Detroit,  Mich., y[c.^u^.  3cL, 1884. 

sjv^'-o-^  cLcuu^^ .after  date, 

for  value  received,..._ ...tcj-e- _ promise  to  pay  to  the  order  of 

_y[^yuj^c>o--'niJk^ ,  &i^cLl^<>oAA^  r\o^. ,....at  our  office  in  Detroit, 
C/'c-^u^i^  J^luy^i^^Vc^  o^^i^cL  c^iXC^^^c-iv-s^. Dollars. 


No.  6. — Reverse  of  No.  5,  Indorsed  and  Receipted. 


No.  7. — A  Negotiable  Note  Payable  at  Bank. 


f  BOO. 00  Detroit,  Mich., 9{o-^.  ^tL, 1884>. 

_sJ'uj-'^'i^jt4A^  cLa^'U^. ......after  date, 

for  value  received, toi-e^ .promise  to  pay  to  the  order  of 

nm^.  ^LclaJz^  Y^', -at  the  National  Bank, 

^vj'^o-'  Dtu^K.^iJ./L'^,^ Dollars, 

with  interest  at  six  per  cent. 


58  COMPLETE  BOOK-KEEPING. 

No.  8. — Reverse  of  No.  7,  Indorsed  to  Bank  and  Paid. 


No.  9. — A  Bank  Draft  in  Payment  of  Note  and  Interest. 


/J<f/.4:^        Worcester,  Mass.,  B^o.   1,1884.       Of^.  JJ/<f4^. 

.._ ULo  ii^t^put-,  xo-'vt'U^o-iAJu  cA^CL^^-^, j^ay  to  the 

order  of. cA-.    CU^.    J^yiAiyniyCL/yu 

Uvj-^o^  J%yUyi^cL\^c^  a^Kyd^  bL'aJijtu^^o-''yL'€^  4^0  Dollars. 


No.  10.— Reverse  of  No.  9,  Full  and  Open  Indorsements. 


f    1 

J 

cT 

1 

14^ 

^ 

^ 

^ 

COMMERCIAL  FORMS.  69 

No.  11. — Time  Draft.    Becomes  an  Acceptance. 


1884. 


/^60.00  ^  Detroit,  Mich., £)c^o.   ^,. 

.xJeyH^  ct^L^i:^. after  date  pay  to  the  order  of 

^..nty^^^yC/-'. at  the  National  Bank, 

rl^t/H^^  ^^tL-n^Jt^e^  CL/u^cL  KyiZ-Vuy' _ Dollars, 

in  full  of  tiffcouTit^  date. 


No.  12. — Reverse  of  No.  11,  Indorsed  and  Paid. 


1 

H 

A 

;l^ 

No.  13. — A  Bank  Draft  Payable  to  Order. 


<^^ so 0.00       Columbus,  Ohio,  9{o-^.  ^J ,  1884.       OU.  y/J<f^. 

Pay  to  the  order  of. JJjxAJCuh^  '^o-<Jt^i./uj~^o-\XyH^ 

C/K^-e^  JyX^jL-uA'Cw^^,^  %J*LA>-^  J^l^^.yvi.^'L,'^^ Dollars. 


COMPLETE  BOOK-KEEPING. 
No.  14. — Reverse  of  No.  13,  Indorsed  to  Us  and  bt  Us. 


No.  15.— A  Personal  Draft  Payable  at  Bank. 


pU.^S  Detroit,  Mich., i^c^^.  ^^, 1884. 

„„ _ i./lV  fiAyoJijt. ^ay  to  the 

order  of. Yl^vJCoo-^yuaZ'  li^o^yuiO _. 

sJ'Uf-<^  ji'VL/yvd/L^^^  v^^i^./cL  Kyo--\jtu^^Lo-^^yL^  ^^  Dollars 
and  charge  the  same  to  the  account  of 


TRANSACTIONS  OP  SECOND  SET. 

November  Ist^  1884. 

Resources. — Ira  Mayhew  &  Co.*  commence  business 
with  $2500  to  their  credit  in  account  in  the  National 
Bank;  Cash  in  safe  $240;  Merchandise  in  store,  worth 


♦The  learner  may  consider  this  work  his,  even  though  he  uses 
the  name  Ira  Mayhew  <t  Co.  He  may  use  his  own  name  &  Co.  in- 
stead of  that  here  employed,  in  case  he  prefers  to  do  so. 


TRANSACTIONS  OF  SECOND  SET.  61 

per  Inventory,  S3440.50;  two  Notes,  No.  1  against  John 
Otis  for  $200,  and  No.  2  against  Hiram  Smith  for  $160; 
and  Brown  &  Smith  owe  us  $210.40  on  account. 

Liabilities. — We  owe  Note  No.  1,  favor  of  Henry  Cook 
for  $277.75;  and  Frank  Goodman  $415.75  on  account. 

Trans.  1.  We  sell  Wm.  Brown  Merchandise  per  Sales 
Book,  amount  $420.  Receive  in  payment  $150  in  Cash, 
balance  on  account. 

Tr.  2.  Receive  from  Henry  Brownell  the  Draft  of  Frank 
Goodman  on  us  for  $240.  Give  in  payment  Merchan- 
dise per  Sales  Book,  amount  $175,  paying  the  balance  in 
Cash. 

November  3d,  1884. 

Tr.  3.  Sell  to  A.  H.  Hinman  Merchandise  per  Sales 
Book,  amount  $540.  Receive  in  payment  $260  in  Cash, 
and  his  Note,  No.  3,  at  30  days  for  the  balance  of  his 
purchase. 

Tr.  4'  Buy  of  Newcomb,  Endicott  &  Co.  an  Invoice 
of  Merchandise  amounting  to  $840.  Give  in  payment 
Bills  Receivable  Nos.  1  and  2  with  Interest  on  same  at 
6  per  cent  from  date  (see  Bill  Book),  and  our  Note  No. 
2  for  balance  of  purchase. 

Tr.  5.  Buy  of  Brown  &  Smith  three  Village  Lots,  Nos. 
6,  8,  and  10,  for  $1650,  paying  them  $100  in  Cash,  and 
$300  in  Merchandise :  balance  on  account. 


November  4th,  1884, 

Tr.  6.  We  contract  with  Wm.  Clark  &  Co.  to  build  us 
a  Cottage  on  Lot  No.  8  for  $1475.  We  are  to  pay  them 
as  the  work  progresses,  according  to  agreement.  We 
advance  them  $80  in  Cash,  and  our  Note  No.  3  for  $200, 
payable  in  twenty  days,  with  interest  at  6  per  cent. 


62  COMPLETE  BOOK-KEEPING. 

Tr.  7.  We  buy  an  Invoice  of  Merchandise  amounting 
to  $1860.  Give  in  payment  Village  Lot  No.  10  for  $650, 
and  our  Check  on  National  Bank  for  balance  of  purchase. 

November  Bth,  I884.. 

Tr.  8.  Sell  John  Clarkson  Merchandise  per  Sales  Book 
6255.50,  and  give  him  our  Check  on  National  Bank  for 
$485.58  to  take  up  Bills  Payable  Nos.  1  and  2,  indorsed 
in  his  favor,  with  Interest  on  No.  1  at  6  per  cent  from 
date.     See  Bill  Book. 

Tr.  9.  Have  rented  a  Stone  Flouring  Mill  with  fixt- 
ures, together  worth  $15000,  at  an  annual  rental  of  6 
per  cent  of  its  present  value,  and  pay  two  months  rent 
by  Check  on  the  National  Bank.  We  open  and  keep  an 
account  with  this  branch  of  our  business  in  the  name 
of  Stone  Mill. 

November  8th,  I884. 

Tr.  10.  Buy  for  Stone  Mill  2600  Bushels  White  Wheat, 
at  $1  per  Bushel.  Give  in  payment  our  Check  on  Na- 
tional Bank  for  $400,  and  our  Note  for  balance,  at  6  per 
cent  Interest,  payable  in  twenty  days. 

November  10th,  188^. 

Tr.  11.  Buy  of  Wm.  Brown  1100  Bushels  of  White 
Wheat,  for  Stone  Mill,  at  $1  per  Bushel,  giving  him 
Merchandise  per  Sales  Book,  amount  $850,  and  credit  in 
account  for  balance  of  purchase. 

Tr.  12.  Sell  to  John  Brown  &  Co.,  from  the  Stone  Mill, 
640  Bbls.  Extra  Flour  at  $6  per  Bbl.  Receive  in  pay- 
ment a  Draft  on  New  York  for  $3000,  indorsed  to  us, 
which  we  deposit  to  our  credit  in  account  in  the  National 
Bank  (Art.  93),  and  the  balance  in  Cash. 


TRANSACTIONS  OF  SECOND  SET.  63 


November  12th,  188Jf. 

Tr.  IS,  The  Order  of  Wm.  Clark  &  Co.  is  presented  to 
us  for  $275,  which  we  pay  in  Merchandise,  charging  them 
therefor  in  account. 

Tr.  U.  Sell  Frank  Goodman  30  Bbls.  Extra  Flour  from 
Stone  Mill  at  $6  per  Bbl.,  and  Merchandise,  per  Sales 
Book,  amount  $240:  balance  of  account  subject  to  Sight 
Draft  in  ten  days.     (See  Tr.  23,  Nov.  22.) 

November  Uth,  1884. 

Tr.  15.  Buy  for  Stone  Mill  1920  Bushels  White  Wheat 
at  SI  per  Bush.  Give  in  payment  Merchandise  per  Sales 
Book,  amount  $1500,  and  our  Check  on  National  Bank 
for  the  balance. 

Tr.  16.  Sell  Wm.  Brown,  on  ten  days  time,  Merchan- 
dise per  Sales  Book,  amount  $875,  and  170  Bbls.  Flour 
from  Stone  Mill,  at  $5  per  Bbl. 


November  17th,  188^ 

Tr.  17.  Pay  Wm.  Clark  &  Co.'s  Orders  on  us,  in  favor 
of  sundry  parties  named  therein,  for  $240  worth  of  Mer- 
chandise, and  for  $270  worth  of  Flour  and  Feed  from 
Stone  Mill,  per  Sales  Book. 

Tr.  18.  Sell  Brown  &  Smith  on  account,  Merchandise 
per  Sales  Book,  amount  $75,  and  15  Bbls.  Extra  Flour 
from  Stone  Mill,  at  $6  per  Bbl. 


November  18th,  1884. 

Tr.  19.   Buy  of  Timothy  Underwood  1400  Bush.  Wheat 
for  Stone  Mill,  at  $1  per  Bush.     Give  in  payment  Mer- 


64  COMPLETE  BOOK-KEEPING. 

chandise,  per  Sales  Book,  amount  S9o0,  and  our  Check 
on  National  Bank. 

Tr.  20.  Sell  Martin  Coatsworth,  of  Columbus,  0.,  250 
Bbls.  Extra  Flour  from  Stone  Mill,  at  $6  per  Bbl.  Re- 
ceive in  payment  the  Draft  of  the  Columbus  National 
Bank  on  the  Park  National  Bank  of  New  York,  indorsed 
in  our  favor.     (See  Forms  Nos.  13  and  14.) 

November  20th,  1884, 

Tr.  21.  Deposit  to  our  credit  in  National  Bank  the 
Draft  received  the  18th  inst.  (Tr.  20),  and  $500  in  Cur- 
rency. 

Tr.  22.  Buy  500  Bush.  Wheat  for  Stone  Mill,  at  90c. 
per  Bush.,  and  an  Invoice  of  Merchandise,  amount  $490. 
Pay  for  both  by  Check  on  National  Bank. 

November  22d,  1884. 

Tr.  23.  Make  our  Draft  on  Frank  Goodman  for  the  bal- 
ance of  account  in  our  favor  (Ti*.  14),  and  deposit  the 
Draft  and  $200  in  Cash  to  our  credit  in  the  National  Bank. 

Tr.  24.  Receive  and  pay  the  Order  of  Brown  &  Smith 
on  us  in  favor  of  Geo.  Goodhue  for  $155,  in  16  Bbls. 
Flour  from  Stone  Mill,  at  $5  per  Bbl.,  and  balance  in 
Merchandise  per  Sales  Book. 

November  24ih,  I884. 

Tr.  25.  Pay  our  Note  No.  3,  given  Nov.  4th  (Tr.  6), 
with  Interest  at  6  per  cent,  and  this  day  due,  by  our 
Check  on  National  Bank,  receiving  the  note,  receipted 
as  shown  in  Form  No.  8. 

Tr.  26.  Receive  from  Wm.  Brown  his  Check  on  Na- 
tional Bank  in  full  payment  of  his  account  to  date. 


TRANSACTIONS  OF  SECOND  SET. 


65 


November  26th,  I884. 

Tr.  27.  We  sell  John  C.  Johnson,  of  Cincinnati,  Mer- 
chandise per  Sales  Book,  amount  $225,  and  320  Bbls. 
Flour  from  Stone  Mill,  at  S5  per  Bbl.  Receive  in  pay- 
ment his  Check  on  City  Bank  for  $1000,  and  currency 
for  the  balance. 

November  28th,  188 J^. 

Tr.  28.  Pay  our  Note  No.  4,  given  Nov.  8th  (Tr.  10),  with 
Interest  at  6  per  cent,  and  this  day  due,  by  our  Check  on 
National  Bank. 


94.  At  the  end  of  the  month,  having  written  up  his 
Day  Book,  Journal,  and  Ledger  to  this  date,  the  learner 
should  take  a  Trial  Balance  before  proceeding  further. 
We  therefore  here  present  the  Trial  Balance  taken  at 
this  time,  that  he  may  compare  his  with  it,  and  see  if 
they  agree,  and  in  case  they  in  any  way  disagree,  ascer- 
tain the  cause  and  correct  his  work,  as  shall  be  neces- 
sary. 

Trial  Balance. 
Dr.  November  SOth,  1884.  Or. 


Amounts. 

Balances. 

Accounts. 

L.F. 

Balances. 

Amounts. 

693  50 

Stock 

88 

6057 

40 

6750 

90 

7944 

25 

1480 

67 

National  Bank 

88 

6463 

58 

5960 

3515 

Cash 

89 

2445 

640 

280 

Bills  Receivable 

89 

360 

530 

40 

Brown  &  Smith 

90 

719 

60 

1256 

16 

33 

Interest 

90 

8 

67 

251 

1650 

1000 

Real  Estate 

90 

650 

1065 

1065 

Wm.  Clark  &  Co. 

91 

7620 

Stone  Mill 

91 

190 

7810 

960| 

Merchandise 

91 

.3651 

132^ 

27079148 

7340 

67 

7340167 

2707948- 

1 

1        1 

i        j 

B.  K.-5. 


Q6  COMPLETE  BOOK-KEEPING. 

95.  The  nature  of  the  Trial  Balance  has  been  explained 
in  Art.  59.  In  the  above  Trial  Balance,  for  November, 
only  such  accounts  are  entered  as  were  open  Nov.  30th. 
The  accounts  with  Bills  Payable,  Frank  Goodman  and 
Wm.  Brown  have  been  settled.  Both  sides  of  each  being 
equal,  they  need  not  and  do  not  appear  in  the  Trial 
Balance ;  for  none  of  them  have  a  balance.  The  balances, 
only,  are  sufficient  for  a  Trial  Balance,  but  it  is  often 
convenient  to  have  the  amounts  entered,  which  give  these 
balances.  The  balances  of  the  student's  Trial  Balance 
should  agree  with  these,  though  the  amounts  may  be 
different.  The  Merchandise  account  has  here  been  kept 
on  two  pages.  When  the  space  first  allotted  to  it  was 
filled,  and  the  account  carried  forward,  only  the  balance 
was  carried  forward;  the  amounts  of  the  Trial  Balance 
for  this  account  thus  include  only  this  balance  and  the 
entries  made  to  this  account  after  the  balance  was  car- 
ried forward.  The  amounts,  in  this  case,  are  less  than 
the  whole  amounts,  bought  and  sold,  by  the  sum  of  the 
credit  entries  before  the  account  was  carried  forward, 
and  would  have  been  different,  had  the  account  been 
carried  forward  under  any  other  date.*  The  footings 
of  the  columns  of  amounts  of  the  Trial  Balance  should 
agree  with  each  other,  but  they  may  be  different  from 
those  here  given ;  while  the  balances  should  agree  with 
those  here  given,  and  their  footings  should  agree  with 
each  other  and  with  these. 


Note.— Ill  opening  this  Set  no  account  is  taken  of  interest  accruing 
on  notes  held  by  us,  or  outstanding  against  us;  though  to  determine 
the  ccac<  gain  or  loss  on  interest  for  any  business,  Interest  should  be 
made  Dr.  on  ojKjning  for  interests  that  have  accrued  in  its  favor  and 
remain  unpaid,  and  Cr.  for  interests  against  it,  with  entries  for  matur- 
ing interests  on  closing.  In  toise  of  large  amount.**,  and  where  required 
in  equity  in  partnerships,  such  entries  are  made. 


*  To  show  the  entire  dfbitg  and  credits  of  Merchandise,  the  amourUs  of 
both  sides  should  be  carried  forward. 


TRANSACTIONS  OF  SECOND  SET.  67 

TRANSACTIONS  CONTINUED. 

December  3d,  I884. 

Tr.  29.  Receive  from  A.  H.  Hinman  the  Draft  of  the 
Worcester  National  Bank  on  the  Park  Nat.  Bank  of  New 
York  for  $281.40;  indorsed  by  him  in  our  favor  (Forms 
Nos.  9  and  10),  in  payment  of  his  Note,  No.  3,  of  Nov.  3, 
and  Interest  (Tr.  3).  We  return  the  Note  to  him  prop- 
erly indorsed  (Forms  Nos.  1  and  2). 

Tr.  SO,  We  buy  25  shares  of  Hecla  Mining  Stock,  at 
$50  per  share.  We  give  in  payment  Village  Lot  No.  6 
(Tr.  5)  for  $700,  and  our  Check  for  the  remainder.  We 
keep  an  account  with  this  enterprise  under  the  name 
Hecla  Mine. 

December  4th,  I884. 

Tr.  31.  We  buy  of  Jno.  Wheatgrower  222  Bush,  of 
Wheat  for  Stone  Mill,  at  $1,  giving  in  payment  3  shares 
of  Hecla  Mining  Stock  (Tr.  30),  at  $60  a  share,  and  Cash 
for  the  remainder. 

Tr.  32.  We  pay  in  cash  an  assessment  of  $15  a  share  on 
the  25  shares  of  Mining  Stock  bought  Dec.  3d.    (Tr.  30.) 


December  6th,  I884. 

Tr.  33.  We  purchase  of  James  Thompson  for  the  Stone 
Mill  1000  Bushels  of  White  Wheat,  at  95c.  per  Bush.,  in 
payment  for  which  we  accept  his  Draft  on  us  for  the 
amount,  payable  to  his  order  at  the  National  Bank,  ten 
days  from  date.     (See  Forms  Nos.  11  and  12.) 

Tr.  34.  Wm.  White  buys  of  us  10  Shares  of  Mining 
Stock,  at  S70  per  Share,  giving  us  in  payment  370  Bushels 
White  Wheat  for  Stone  Mill,  at  $1  per  Bush.,  and  his 


68  COMPLETE  BOOK-KEEPING, 

Note  at  30  days,  made  payable  to  the  order  of  Wm. 
Smith  and  indorsed  by  him. 


December  mh,  I884. 

Tr.  35.  We  deposit  $2150  of  Cash ;  including  Draft 
(Tr.  29),  in  the  National  Bank. 

Tr.  S6.  We  buy  of  Samuel  Smithfield  an  Invoice  of 
Mdse.j  amount  S1540.  Give  in  payment  152  Bbls.  Flour 
from  Stone  Mill  at  $5  per  Bbl.,  and  our  Check  for  balance 
of  Invoice. 

December  10th,  I884. 

Tr.  37.  We  pay  a  Freight  Bill  on  Mdse.  received  to 
date,  by  our  check  for  $17.60,  and  Cash  for  other  items 
of  Expense  to  date,  together  amounting  to  $12.40. 

Tr.  38.  Brown  &  Smith  buy  of  us  10  Shares  of  Mining 
Stock,  at  $60  per  Share,  and  19  Bbls.  Flour  from  Stone 
Mill,  at  $5  per  Bbl.  We  settle  our  account  and  pay  in 
Cash  the  balance  their  due. 


December  13th,  188J^. 

Tr.  39.  Sell  Wm.  Brown  Mdse.,  amount  $270  per  Sales 
Book,  &^  Bbls.  Extra  Flour  from  Stone  Mill,  at  $6  per 
Bbl.,  and  our  remaining  2  Shares  of  Mining  Stock  for 
$55  a  Share.  Receive  in  payment  $240  in  Cash  ;  balance 
on  account. 

Tr.  JfO.  Deposit  $1260  to  our  credit  in  account  in  the 
National  Bank. 

December  16th,  188^. 

Tr.  41.  We  pay  our  Acceptance  of  Dec.  6  (Tr.  33)  by 
our  Check  on  the  National  Bank. 


TRANSACTIONS  OF  SECOND  SET.  69 

Tr.  Ji2.  We  fill  Frank  Goodman's  order  for  19  Bbls. 
Flour  from  Stone  Mill,  at  $5  per  Bbl.,  and  Mdse.  per 
S.  B.,  amount  $420. 

December  20th,  1884. 

Tr.  43.  Wm.  Clark  &  Co.  have  fulfilled  their  contract 
for  building  a  Cottage,  entered  into  Nov.  4th  (Tr.  6). 
Accepting  the  work  and  receiving  the  keys,  we  give 
them  credit  for  the  contract  price.  We  settle,  and  pay 
them  the  amount  their  due  by  Check  on  Nat.  Bank. 


December  22d,  1884. 

Tr,  44-  We  pay  2  months'  Store  Rent,  at  $125  per  mo., 
by  Check ;  and  for  Clerk  hire,  Stationery,  and  Postage  to 
date,  $255  in  Cash. 

December  27th,  I884. 

Tr.  4^'  Receive  from  Brown  &  Smith  on  account  Draft 
on  New  York  for  $840. 

Tr.  46,  Fill  the  order  of  Brown  &  Smith  for  Mdse.  per 
Sales  Book,  amount  $450,  and  for  76  Bbls.  Flour  from 
Stone  Mill,  at  $5  per  Bbl. 

Abstract  of  Inventory. 

Taken  December  31st,  1884. 

Real  Estate,  House  and  Lot  worth        $2600. 

Merchandise,  Per  Inventory  Book  934.93 

Stone  Mill,  Flour  and  Feed  worth  412.  $3946.93 


96.  With  the  transactions  of  another  month  written 
up  in  Day  Book,  Journal,  and  Ledger,  the  learner  will 
again  take  a  Trial  Balance,  under  date  of  December 
31st,  1884,  as  done  for  November  at  the  65th  page,  which 


70  COMPLETE  BOOK-KEEPING. 

should  agree  with  that  here  given.  After  taking  this 
Trial  Balance,  and  examining  the  Inventory  of  property 
on  hand,  unsold,  belonging  to  the  business,  as  stated 
above,  the  interesting  problems  for  consideration  will  be 
to  determine  the  following  particulars : 

IsL  What  have  been  the  Gains  of  the  business?  and 
what  accounts  indicate  them? 

2d.  What  have  been  the  Losses  of  the  business?  and 
what  accounts  indicate  them? 

3d.  What  has  been  the  Net  Result  of  the  business? 

01.  What  is  the  amount  of  our  Net  Stock  on  closing? 

Sth.  What  is  the  amount  of  our  Resources  on  closing? 
and  of  what  do  they  consist  ? 

0th.  What  is  the  amount  of  our  Liabilities  on  closing  ? 
and  of  what  do  they  consist  ? 

The  answers  to  these  questions  for  this  Set  (or  for  any 
other  Set)  may  be  determined  by  the  process  known  as 
closing  the  Ledger  (Arts.  61  to  64),  which  we  shall  con- 
sider and  apply  to  this  Set,  and  which  it  is  of  the  utmost 
importance  the  learner  should  carefully  study  until  he 
becomes  so  familiar  with  the  various  steps  taken,  and 
the  reasons  for  them,  that  he  can  apply  the  principles 
involved  as  he  may  have  occasion,  in  theoretical  or 
practical  work. 

97.  The  problem  before  us  for  solution  now  is, — With 
this  Trial  Balance  and  Inventory,  how  shall  we  elimi- 
nate the  gains  and  losses  from  the  Speculative  Accounts 
of  the  business,  and  obtain  final  Ledger  Balances  cor- 
rectly rei)resenting  our  Resources  and  Liabilities,  so  as 
to  give  satisfactory  and  reliable  answers  to  the  six  ques- 
tions raised  in  Art.  96?  Preparatory  to  its  consideration, 
let  us  note  what  has  been  said  of  the  Classification  of 
Accounts,  Arts.  9  to  17,  and  under  the  First  Classifica- 
tion state,  Ist.  The  accounts  of  the  Trial  Balance  that 
are  Personal.     Ans.  Brown  &  Smith,  Frank  Goodman, 


CLOSING  SECOND  SET, 


71 


Dr, 


Trial  Balance. 
December  SisL  1884. 


Or, 


Amounts. 

Balances. 

Accounts. 
Stock 

L.P. 

Balances. 

Amounts. 

6057 

■  1 
40 

605740 

610 

!      330 

Bills  Receivable 

280 

1549 

60 

Brown  &  Smith 

10 

1559  60 

515 

515 

Frank  Goodman 

; 

530 

530 

Wm.  Brown 

Interest 

10 

07 

1007 

2475 

1775 

Real  Estate 

700 

1540 

35 

Merchandise 

1505 

1625 

35 

Hecla  Mine 

1590 

4890 

67 

1933 

07 

National  Bank 

2957  60 

1542 

Stone  Mill 

368 

1910 

535 

1 

535 

Expense 
Cash 

4876 

40    . 

757 

40 

41ld 

20688 

67 

6445 

47 

6445 

47 

20688 

67 

Wm.  Brown,  and  National  Bank.  State,  2d.  The  ac- 
counts that  are  Real.  Ans.  Bills  Receivable,  Real  Estate, 
Merchandise,  Hecla  Mine,  Stone  Mill,  and  Cash.  State, 
3d.  The  accounts  that  are  Imaginary.  Ans,  Stock,  In- 
terest, and  Expense.  Under  the  Second  Classification 
state,  1st.  The  accounts  of  the  Trial  Balance  that  are 
Speculative.  Ans.  Interest,  Real  Estate,  Merchandise, 
Hecla  Mine,  Stone  Mill,  and  Expense.  State,  2d.  The 
accounts  that  are  Non-speculative.  Ans.  Stock,  Bills  Re- 
ceivable, Brown  &  Smith,  Frank  Goodman,  Wm.  Brown, 
National  Bank,  and  Cash. 

Note.— We  can  not  become  too  familiar  with  these  exercises,  for 
much  depends  on  their  thorough  mastery. 

98.  Now  take  each  account  of  the  Trial  Balance  and 
name  its  place  in  both  of  the  two  Classifications,  thus  : 
Stock,  Imaginary,  and  Non-speculative ;  Bills  Receivable 
and  Cash,  each  Real  and  Non-speculative;  Brown  & 
Smith,  Frank  Goodman,  Wm.  Brown,  and  National  Bank, 
each  Personal  and  Non-speculative;   Interest  and  Ex- 


72  COMPLETE  BOOK-KEEPING. 

pense,  each  Imaginary  and  Speculative;  Real  Estate, 
Merchandise,  Hecla  Mine,  and  Stone  Mill,  each  Real  and 
Speculative.  Readiness  in  these  and  like  exercises  will 
enable  the  learner  better  to  understand  his  work  as  he 
advances. 

99.  Let  us  interpret  this  Trial  Balance  and  see  what 
it  teaches.  The  Cr.  balance  to  .Stock  indicates  the  net 
capital  with  which  we  began  business.  The  Dr.  balance 
to  Bills  Receivable  shows  the  amount  of  bills  we  hold. 
The  Cr.  balance  to  Brown  &  Smith's  account  shows  how 
much  we  owe  them.  The  Dr.  balances  to  Frank  Good- 
man and  Wm.  Brown's  accounts  show  how  much  they 
owe  us.  So  far  we  have  seen  nothing  that  indicates 
either  profit  or  loss.  But  the  Cr.  balance  to  Interest 
shows  a  gain.  Real  Estate,  Merchandise,  and  Hecla 
Mine  Accounts  have,  each,  a  Dr.  balance.  Do  these  bal- 
ances indicate  gain?  No.  Do  they  show  lossf  Not  cer- 
tainly. Well  then,  what  do  they  show?  Simply  this; 
that  each  has  cost  us  more  than  it  has  returned  to  us, 
by  the  amount  of  its  Dr.  balance.  Does  not  this,  then, 
show  loss?  No,  the  evidence  is  not  all  in.  There  are 
Inventories  belonging  to  some  of  these,  which  must  be 
taken  into  account  before  we  can  determine,  with  cer- 
tainty, whether  they  indicate  profit  or  loss.  These  we 
will  presently  consider.  The  Dr.  balance  to  National 
Bank  shows  the  amount  we  have  remaining  to  our 
credit  in  bank.  The  Cr.  balance  to  Stone  Mill  shows 
that  it  has  brought  us  more  than  it  has  cost  us,  and 
has  hence  been  a  source  of  profit  to  the  amount  of  this 
balance,  aside  from  any  Inventory  belonging  to  it.  The 
Dr.  balance  to  Expense  shows  a  loss.  The  Dr.  balance 
to  Cash  shows  the  amount  of  Cash  on  hand. 

100.  From  Art.  99,  we  see  there  are  six  Speculative 
accounts  of  the  Trial  Balance  that  indicate  profit  or  loss. 
In  gathering  tlie  measures  of  profits  and   losses  from 


CLOSING  SECOND  SET.  73 

these  accounts,  severally,  it  will  be  convenient  to  enter 
the  gains  to  the  Cr.  side  of  Profit  and  Loss,  and  the 
losses  to  the  Dr.  side  of  this  account.  And  when  we 
determine  the  net  gain,  we  shall  want  to  transfer  it  to 
the  Stock  Account.  In  closing,  we  shall  therefore  need 
to  use  the  six  Speculative  Accounts  that  indicate  profit 
or  loss,  a  Profit  and  Loss  Account,  and  the  Stock  Account, 
making  eight  accounts  in  all,  which  are  shown  on  the 
next  page  in  Skeleton  Ledger  form,  with  the  balances  of 
the  Trial  Balance  belonging  to  them  severally.  Apart 
from  these  balances  we  enter  to  the  credit  of  each  ac- 
count having  an  Inventory,  its  value  in  red  ink  (indicating 
balances  on  hand  to  be  brought  down).  With  the  balances 
and  Inventories  entered,  as  indicated,  we  are  prepared  to 
find  the  profits  and  losses  that  have  arisen  in  the  busi- 
ness, and  to  determine  its  net  result. 

101.  Looking  at  this  Skeleton  Ledger,  we  see  Stock  is 
not  Speculative.  It  simply  represents  the  net  capital  put 
into  the  business,  belonging  to  the  different  accounts, 
some  of  which  are  speculative,  while  others  are  not.  All 
of  the  other  accounts  are  Speculative,  except  Profit  and 
Loss,  whose  office  it  is  to  receive  and  temporarily  hold 
the  measures  (or  amounts)  of  both  profit  and  loss  shown 
by  the  Speculative  accounts,  until  the  net  result  of  the 
business  as  a  whole  is  determined;  which  net  result  is 
then  transferred  to  the  Stock  Account,  as  stated  in  Arts. 
61  to  64.  The  Cr.  balance  to  Interest  shows  a  gain.  The 
excess  of  the  Inventory  to  Real  Estate  over  the  Dr.  bal- 
ance (now  making  a  Cr.  balance)  shows  a  gain.  The 
same  is  true  of  Merchandise;  while  to  the  Cr.  balance 
of  the  Stone  Mill  Account  we  add  the  Inventory  for  the 
gain.  These  four  accounts  may  be  closed  into  Profit  and 
Loss,  as  stated  in  Art.  63,  and  as  shown  in  the  first  of 
the  following  Journal  entries.  The  Hecla  Mine  Account, 
having  a  Dr.  balance  and  no  Inventory,  shows  a  loss, 


74 


COMPLETE  BOOK-KEEPING. 


Dr. 


Skeleton  Ledger. 
8tock  Cr.  Dr.         Hecla  Mink         Or. 


8002.40 

6057.40 
1945. 

8002.40 

- .  - 

8002.40 

8002.40 

35. 


Dr. 


Interest 


Cr. 


10.07 


10.07 


Dr.         Stone  Mill 


Or. 


780. 

368. 

412. 

780. 

780. 

412. 

Dr. 


Real  Estate 


Cr. 


1775. 
825. 

2600. 

2600.  _ 

2600. 

2600. 

Dr. 


535. 


Expense  Or. 

535. 


Dr.        Mkrchandisk        Cr. 


Dr.     Profit  and  Loss     Or. 


3.5. 
899.93 

934.9^^ 

934.93 

934.93 

934.93 

570. 
1945. 

2516. 

2515. 

2515.  _ 

CLOSING  SECOND  SET. 


75 


and  the  same  is  true  of  Expense,  both  of  which  close 
into  Profit  and  Loss,  as  stated  in  Art.  64,  and  as  shown 
in  the  second  of  the  closing  Journal  entries.  Finally,  the 
third  Journal  entry  closes  the  net  gain  of  the  business 
to  the  Stock  Account. 

Closing  Journal  Entries. 
December  31,  1884. 


Interest 
Real  Estate 
Merchandise 
Stone  Mill 


Dr. 


To  Profit  and  Loss 


Profit  and  Loss        Dr. 


To  Hecla  Mine 
*'    Expense 


Profit  and  Loss        Dr. 


To  Stock 


10 
826 
899 
780 


670 


1945 


2515 


35 
635 


1945 


Instead  of  the  above  three  Journal  entries  for  closing, 
one  might  have  sufficed,  as  is  explained  in  Arts.  65  and 
104,  and  as  shown  below : 


Interest 
Real  Estate 
Merchandise 
Stone  Mill 


Dr. 


To  Hecla  Mine 
"    Expense 
*'    Stock 


10107 
825 
899 

780 


35 

535 

1945 


102.  Posting  the  first  of  these  closing  Journal  entries 
to  the  Skeleton  Ledger ,  balances  the  Interest,  Real  Estate, 
Merchandise,  and  Stone  Mill  Accounts  by  withdrawing 
from  each  of  these  Speculative  Accounts  the  measure  of 
gain  to  which  it  has  given  rise,  and  placing  the  amount 


76  COMPLETE  BOOK-KEEPING, 

of  the  whole  to  the  credit  of  Profit  and  Loss.  Three  of 
these  accounts  have  Inventories  belonging  to  them,  which 
are  brought  down  as  Dr.  balances.  Posting  the  second 
of  these  closing  Journal  entries  balances  the  Hecla  Mine 
and  Expense  Accounts,  by  covering  the  measures  of  loss 
to  which  they  have  given  rise,  and  placing  the  amount 
of  the  whole  to  the  debit  of  Profit  and  Loss.  The  Cr.  side 
of  the  Profit  and  Loss  Account  now  shows  the  luhole  gain 
of  the  business,  and  the  Dr.  side  of  this  account  shows 
the  whole  loss  of  the  business.  The  difference  of  the  two 
sides  will  manifestly  be  the  net  gain  of  the  business. 
Posting  the  third  closing  entry  balances  the  Profit  and 
Loss  Account,  and  transfers  this  Tiet  gain  to  the  Cr.  side 
of  the  Stock  Account. 

Note. — Observe  these  particulars  of  the  Stock  Account :  Its  Cr.  bal- 
ance, as  seen  in  the  Trial  Balance,  represents  the  net  capital  invested 
in  the  business;  the  balance  of  the  Profit  and  Loss  Account,  carried 
to  Stock,  represents  the  net  gain  of  the  business;  while  tlie  balance 
brought  down  (the  original  net  stock  and  tlie  net  gain  together)  consti- 
tutes the  net  capital  at  this  stage  of  the  business. 

103.  The  skeleton  Ledger  here  introduced  has  been 
employed  in  order  to  show  more  clearly  the  processes 
of  closing.  With  the  Inventories  entered  in  red  ink  to 
the  same  accounts  in  the  regular  Ledger,  and  the  Jour- 
nal entry  for  closing  regularly  posted  to  this  Ledger,  the 
result  would  be  the  same.  In  either  case,  the  balances 
now  taken  together  constitute  the  Ledger  Balances  (Art. 
67)  on  closing  the  business,  or  on  determining  the  net 
result  to  this  date.  These  balances  consist  of  the  Non- 
speculative  Accounts  of  the  Trial  Balance  not  used  in 
closing  the  Ledger,  with  their  balances  on  the  same  side 
and  unchanged,  together  with  Stock  as  changed,  and  the 
Inventories  of  the  Speculative  Accounts,  brought  forward 
as  balances,  as  here  shown.  The  Speculative  Accounts 
having  no  Inventories  are  all  closed. 


CLOSING  SECOND  SET. 


77 


Br. 


Ledger  Balances. 
Jantmry  1,  1885. 


Or, 


■ 

Accounts. 

L.F. 

Amounts. 

AccouiUs. 

L.P. 

Amounts. 

Bills  Receivable 
Frank  Goodman 
Win.  Brown 
Real  Estate 
Merchandise 
National  Bank 
Stone  Mill 
Cash 

330 
515 
530 

2600 
934 

1933 
412 
757 

93 
07 

40 
40 

Stock 

Brown  &  Smith 

/ 

8002 
10 

40 

8012 

8012 

40 

Note. — Upon  examination  it  will  be  seen  that  the  Dr.  balances  of 
the  Ledger  Balances  represent  our  entire  Resources,  and  the  Cr.  bal- 
ances our  Net  Stock  and  Liabilities,  as  here  shown,  and  as  represented 
in  the  Diagram  at  the  33d  page.  As  applied  to  this  Second  Set,  the 
Resources  amount  to  $8012.40.  This  will  leave  $8002.40  of  net  Stock 
after  paying  the  claim  of  Brown  &  Smith,  the  only  Liability  of  the 
business. 

104.  In  this  process  of  closing  the  Ledger,  the  sums 
entered  to  Speculative  Accounts  represent  the  measures 
of  gain  or  loss  these  accounts  have  severally  given  rise 
to,  or  that  are  recorded  in  them,  and  not  the  matter  of 
gain  or  loss.  The  gains  themselves  belong  to  the  accounts 
representing  Resources,  while  the  losses  stand  among  our 
Liabilities,  or  have  been  paid,  and  in  either  case  lessen 
our  Resources. 

Note.— With  this  closing  accomplished  by  one  entry,  as  explained 
in  Art.  65,  and  as  shown  on  page  75,  a  Profit  and  Loss  Account  is  not 
required,  as  there  had  been  no  previous  occasion  for  opening  one. 
The  Ledger  Balances  will  be  the  same  whether  one  or  three  entries 
are  used  in  closing.  The  books  are  now  in  readiness  to  commence 
the  work  of  the  new  year. 


78 


COMPLETE  BOOK-KEEPING. 


BILL    BOOK. 
Bills  KscsiyABLE 


Sd   Set. 


No.       Date. 

Promisor. 

Indorser. 

In  Whose  Favor. 

1883. 

1     June 

3 

John  Otis 

H.  Allen 

IraMayhew&Co. 

2 
3 

Jan. 
Nov. 

3 
3 

Hiram  Smith 
A.  H.  Hinman 

do.             do. 
do.             do. 

4 

Dec. 

6 

Wm.  White 

Wm.  Smith 

do.            do. 

Bills  Payable 


No. 

Date 

.     1 



1884. 

1 

May 

5 

2 

Nov. 

3 

3 

Nov. 

4 

4 

Nov. 

8  1 

5 

Dec. 

6 

Promisor. 


Ira  Mayhew  &  Co. 
do.  do. 

do.  do. 

do.  do. 

do.  do. 


Indorser. 


Jas.  Thompson 


In  Whose  Favor. 


Henry  Cook 
Newcomb,  E.  &  Co. 
Wm.  Clark  &  Co. 
0.  Wheaton 
Jas.  Thompson 


105.  The  entries  of  the  Bill  Book,  except  those  at  the 
right,  under  the  head  of  Remarks,  should  be  made  when- 
ever Bills  Receivable,  whether  Notes  or  Acceptances,  come 
into  our  hands,  and  whenever  our  own  Bills  Payable  are 
given  to  others.  We  thus  have  a  complete  record  of  all 
bills  we  handle,  separate  from  the  bills  themselves.  Then, 
by  consulting  this  book,  we  can  see  what  Bills  Receivable 
we  at  any  time  hold,  and  when  they  become  due,  while 
our  bills  remain  secure  in  the  safe.  The  space  under 
the  head  of  Remarks  should  be  filled  as  bills  are  jmid 
or  disposed  of. 


ILLUSTRATIVE  BILL  BOOK. 


79 


3d   Set. 


BILL    BOOK. 
Bills  Beceivable. 


Where  Payable. 

Time. 

When  Due. 

Amount. 

Remarks. 

Nat.  Bank 

do.    do. 
Our  Office 

Nat.  Bank 

18  mos. 

11  mos. 
30  days 

30  days 

1884; 
Dec. 

Dec. 
Dec. 

1886. 

Jan. 

3 

3 
3 

6 

200 

160 
280 

330 

Sold  to  N.,  E.  &  Co.  ^ 

Nov.  3,  1884.              J 
Paid  Dec.  3/84. 

Bills  Payable. 


Where  Payable. 

Time. 

When  Dae. 

Amount. 

Remarks. 

1884. 

Our  Office 

6  mos. 

Nov. 

5 

277 

75 

Pd.  Nov.  5/84. 

do.    do. 

2  days 

Nov. 

5    I    465 

Pd.  Nov.  5/84. 

Nat.  Bank 

20  days 

Nov. 

24  ;    200 

Pd.  Nov.  24/84. 

do.     do. 

20  days 

Nov. 

28 

2200 

Pd.  Nov.  28/84. 

do.    do. 

10  days 

Dec. 

16 

950 

Pd.  at  Maturity. 

106.  The  headings  of  Bill  Books  may  differ  from  these, 
giving  such  particulars  as  persons  keeping  them  desire 
relating  to  their  bills.  In  case  of  Bills  Receivable,  we 
can  ascertain  particulars  of  our  bills  without  examining 
them.  And  in  case  of  Bills  Payable,  the  Bill  Book  is 
our  only  means  of  information  after  such  bills  have 
been  issued,  for  the  bills  themselves  are  in  the  hands 
of  other  parties.  Still,  every  business  man  should  know 
when  such  bills  become  due,  their  amount,  and  where 
they  are  payable.  The  Bill  Book  is  even  more  impor- 
tant for  Bills  Payable  than  for  Bills  Receivable. 


80 


COMPLETE  BOOK-KEEPING. 


3DAY  BOOK. 

November  1,  1884. 


2d  Set. 


Ira  May  hew  &  Co.  begin  business  with  the 
following  Resources: 

On  Deposit  in  National  Bank 

Cash  in  safe 

Merchandise  per  Inventory 

John  Otis'  Note,  No  1  $200 

H.  Smith's  Note,  No.  2  160 

Brown  &  Smith  owe  us  on  acct. 


We  owe  as  follows: 

Our  Note  No.  1,  fav.  Henry  Cook 

Frank  Goodman  on  acct. 


Sell  Wm.  Brown  Mdse.  S.  B. 
Receive  Cash 
Balance  on  acct. 


Pay  Frank  Goodman's  Draft  on  us 

Merchandise        S.  B. 

Cash 


Nov.  3. 


Sell  A.  H.  Hinman  Mdse.  S.  B. 
Receive  Cash 
Hinman's  Note  No.  3 


Buy  Mdse.  of  N.  E.  <fe  Co. 
Give  Bills  Rec.  Nos.  1  and  2 
Interest  on  same 
Our  Note  No.  2 


Inv.  1 


Buy  of  Brown  &  Smith 

3  Village  Lots,  Nos.  6,  8,  and  10 

Pay  in  Caah 

Merchandise   S.  B. 

Balance  on  acct 


2500 

240 

3440 


210 


277 
415 


150 
270 


175 
65 


280 


360 

25 

455 


100 

300 

1250 


6750  90 


693  50 


420 


240 


540 


840 


1650 


ILLUSTRATIVE  WORK, 


dl 


2d  Set. 


I>AY  BOOK. 

November  4,  1884. 


Pay  Wni.  Clark  &  Co.  on  contract 

Cash 

Our  Note,  No.  3 


Buy  Mdse. 

Give  Village  Lot  No.  10 

Check  on  Nat.  Bank 


Nov.  5. 


Pay  Bills  Pay.  Nos.  1  and  2 
Interest  on  No.  1 
Give  Merchandise        S.  B. 
Check  on  Nat.  Bank 


Pay  Rent  of  Stone  Mill  2  mos. 
By  Check  on  Nat.  Bank 


Nov.  8. 


Buy  for  Stone  Mill 
2600  Bu.  White  Wheat 
Give  Check  on  Nat.  Bank 
Our  Note,  B.  P.  No.  4 

^7o^    10. 

Buy  of  Wni.  Brown 
1100  Bu.  White  Wheat 
Pay  Merchandise        S.  B. 
Balance  on  acct. 


Sell  Jno.  Brown  &  Co. 
540  Bbls.  Ex.  Flour 
Receive  and  deposit  Draft 
Balance  in  Cash 


Nov.   12. 


Inv.  2 


@$1 


@$1 


@$6 


Pay  Wm.  Clark  &  Co.'s  Order  in  Mdse. 
B.  K.-6. 


80 
200 


650 
1210 


732  75 


8 
255 
485 


400 
2200 


850 
250 


3000 
240 


280 


1860 


741 


08 


150 


2600 


1100 


3240 


275 


82 


COMPLETE  BOOK-KEEPING. 


X)^Y  BOOK. 

November  12.  1884. 


3d  Set. 


Sell  Frank  Goodman,  acct.  10  days 
30  Bbls.  Ex.  Flour 
Merchandise       S.  B. 


Nov.  14.- 


Buy  1920  Bu.  White  Wheat 
Pay  Merchandise        S.  B. 
Check  on  Nat.  Bank 


Sell  Wm.  Brown,  acct.  10  days 
Merchandise        S.  B. 
170  Bbls.  Flour 


Nov.  17.- 


Pay  Wra.  Clark  &  Co.'s  Orders 
Merchandise        S.  B. 
Flour  and  Feed        S.  B. 


Sell  Brown  &  Smith 
Merchandise  S.  B. 
15  Bbls.  Extra  Flour 


Nov.  18. 


Buy  1400  Bu.  Wheat 
Pay  Merchandise        S.  B. 
Check  on  Nat.  Bank 


Sell  M.  Coataworth  for  Cash 
260  Bbls.  Ex.  Flour 


Nov.  20.- 


Deposit  in  Nat.  Bank  Cash 


@$6 


@$1 


@$5 


®|6 


®$1 


®|6 


18) 
24) 


160) 
42) 


87  > 
85) 


24) 
27) 


86) 
46) 


ILLUSTRATIVE  WORK. 


83 


Sd  Set. 


D^Y  BOOK. 

November  20,  1884. 


Buy  500  Bu.  Wheat 

Merchandise 

Give  Ck.  on  Nat.  Bank 

: Nov.  22, 


Deposit  in  Nat.  Bank 

Our  Dft.  on  Frank  Goodman 

Cash 


Pay  Brown  &  Smith's  Order 
By  16  Bbls.  Flour 
Merchandise       S.  B. 


Nov.  24r 


Pay  Bill  Pay.  No.  3 
Interest  on  same 
By  Ck.  on  Nat.  Bank 


Receive  from  Wm.  Brown  Ck. 


Nov.  26^ 


Sell  Jno.  C.  Johnson,  Cincinnati 

Merchandise        S.  B. 

320  Bbls.  Flour 

Receive  Ck.  $1000  and  Cash  $825 


Nov.  28. 


Pay  Fill  Pay.  No.  4 
Interest  on  same 
By  Ck.  on  Nat.  Bank 


@90c 
Inv.  31 


@$d        80 
715 


45) 
49) 


24125 
20) 


209 


225 
16C0 


67 


782 


91) 


444  25 


155 


2C067 


1745 


18S5 


22(7  33 


84 


COMPLETE  BOOK-KEEPING, 


November  1,  1884. 


2d  Set. 


88  I  National  Bank        Dr. 

89  ;  Cash 

88  Merchandise 

89  Bills  Receivable 


88 

r>rowii  oc  oiuiiu 

88 
89 
89 

Stock 

Dr. 

89 
90 
88 

Cash 

Wm.  Brown 

Dr. 

89 
88 
89 

Frank  Goodman 

Dr. 

89 
89 
88 

Cash 

Bills  Receivable 

Nov 
Dr. 

88 
89 
90 
89 

Merchandise 

Dr. 

90 
89 
88 
90 

Real  Estate 

Dr. 

To  Stock 


To  Bills  Payable 
"    Frank  Goodman 


To  Merchandise 


To  Merchandise 
"    Cash 


To  Merchandise 


To  Bills  Receivable 
"    Interest 
*'    Bills  Payable 


To  Cash 
"    Merchandise 
"   Brown  A  Smith 


2600 

240 
3440  50 

360 

210  40 


693  50 


150 
270 


240 


6750  90 


277  75 
415  75 


280 


840 


1650 


420 


175 
65 


540 


900 

25 

455 


100 

300 

1250 


ILLUSTRATIVE  WORK 


85 


Sd  Set. 


JOTJRlSrAL. 

November  4,  1884. 


91 
89 
89 


Wm.  Clark  &  Co.  Dr. 


88     Merchandise 
90 


89  Bills  Payable 

90  Interest 
88 
88 


91 


91 


Stone  Mill 


Stone  Mill 


91     Stone  Mill 
88 

90  ; 


To  Cash 
"    Bills  Payable 


Dr. 


To  Real  Estate 
"    Nat.  Bank 


Nov.  5. 
Dr. 


To  Merchandise 
"    Nat.  Bank 


Dr. 

To  Nat.  Bank 

.  Nov.  8. 

Dr. 

To  Nat.  Bank 
"    Bills  Payable 

Nov.  10. 

Dr. 

To  Merchandise 
"    Wm.  Brown 


88  National  Bank        Dr. 

89  Cash 


91 


91 


To  Stone  Mill 
Nov.  12.  


Wm.  Clark  &  Co.    Dr. 


To  Merchandise 


18601 


80 
200 


650 
1210 


732 

8 


150 


2600 


1100 


3000 


275 


255 
485 


150 


400 
2200 


850 
250 


3240 


275 


86 


COMPLETE  BOOK-KEEPING, 


JOURNAL. 

November  12,  1884. 


Sd  Set. 


89 
91 
88 


91 
88 
88 


90 
88 
91 


90 
91 
91 


91 


JFrank  Goodman     Dr. 


3tone  Mill  Dr. 


Wm.  Brown  Dr. 


Wm.  Clark  &  Co.    Dr. 


To  Stone  Mill 
"    Merchandise 


JVcw.  14. 


To  Merchandise 
"    Nat.  Bank 


To  Merchandise 
Stone  Mill 


Nov.  17. 


To  Merchandise 
"    Stone  Mill 


Brown  &  Suiith      Dr. 


To  Merchandise 
"    Stone  Mill 


JViw.  18. 


Intone  Mill  Dr. 


To  Merchandise 
"    Nat.  Bank 


Cash 


Dr. 


To  Stone  Mill 

Nov.  20. 

:  National  Bank        Dr. 

To  Cash 


420 


1920 


1725 


510 


165 


100 


300 


:  wo 


180 
240 


1500 
420 


875 
850 


240 
270 


76 
90 


»50 
450 


500 


:i)00 


ILLUSTRATIVE  WORK, 


87 


2d  Set. 


JOXJRlSrAL. 

November  20,  1884. 


91     fetone  Mill 
91     Merchandise 
88 


88     iNat.  Bank 
89 


99 
91 
91 


Dr. 

To  Nat.  Bank 

Nov.  22. 

Dr. 

To  Frank  Goodman 
"    Cash 


Brown  &  Smith      Dr. 


89  Bills  Payable 

90  Interest 
88 


89 
90 


91 
91 


90 

88 


Cash 


Cash 


Bills  Payable 
Interest 


To  Stone  Mill 
"    Merchandise 


Nov.  24. 
Dr. 


To  Nat.  Bank 


Dr. 

To  Wm.  Brown 

Nov.  26.    

Dr. 

To  Merchandise 
"    Stone  Mill 

Nov.  28. 

Dr. 

To  Nat.  Bank 


450 
490 


444  25 


155 


200 
6|7 


.745 


.825 


$200 
7$3 


940 


244^ 
200 


80 
75 


200(7 


.745 


L600 


J207  33 


88 


COMPLETE  BOOK-KEEPING, 


Dr. 


LEJDGtER. 

Stock 


Sd  Set. 
Or, 


Nov.  j  l|  To  Sunds. 
Balance 


^30 


84 


693150 

6or)7  40 
675q9G 


18M.{      >  {      II  I 

Nov.    1  By  Sunds.  84!675d90 


18M. 

Dec. 


1  By  Balance 


6750190 
6057^40 


Dr. 


National  Bank 


l^M. 

11 

18M. 

I 

I 

1 

1 

Nov. 

1 

To  stock 

84  2500 

Nov. 

4 

By  Mdse. 

85 

1210 

u 

10 

•'   Draft 

85  3000 

it 

5 

"    Sunds. 

85 

485 

58 

« 

20 

"  Cash 

8G  2000 

(i 

5 

"    Stone  Mill 

85 

150 

« 

22 

"  Sunds. 

87     444 

25 

tt 

8 

*•       do. 

85 

400 

t( 

14 

"      do. 

86 

420 

«( 

18 

"      do. 

86 

450 

/ 

« 

20 

"    Sunds. 

87 

940 

/ 

(1 

24 
28 

"      do. 
♦'      do. 

87 
87 

200 
2207 

67 
33 

/ 

" 

m 

'•    /.'-./ ■-■ 

;./.Sr.' 

67 

'' 

7044 

20 

7944 

25 

1884. 

Dec 

1 

To  Balance 

1480 

1 
1 

67 

Dr. 


Nov. 


1!  To  Stock 
%   "  Sunds. 
4j   "      do. 


Mbbchandisb 


.<^l< 


'84'344O'50| 
84  840 
851860 


6140 


60 


Nov. 


Or. 


l' By  Sunds.  '84' 

1  "  F.  Goodman  84 
3  ♦•  Sunds.  84 
3  "  Real  Estate  84 
5  ••  Sunds.  '85 
0  '•  Stone  Mill    185, 

2  "  Clark  &  Co.  85 
2  "  F.  Goodman,  86 


1 14  "  Stone  Mill     86 


W.  Brown 
Clark  dt  Co.  8^ 

Jinhtiicr  p.  !)l 


ILLUSTRATIVE  WORK. 


89 


Sd  Set. 
Dr. 


LEjDGrlCR. 

Gash 


Or. 


18M. 

1 

1         1 

1884. 

J 

— 

Nov. 

1 

To  Stock 

84 

240 

Nov. 

1 

By  F.Goodman 

65 

1 

"  Mdse. 

84 

150 

" 

3 

"  Real  Estate 

84 

100 

3 

"       do. 

84 

260 

" 

4 

"  Clark  &  Co. 

H5 

80 

10 

"  Stone  Mill  85 

240 

" 

20 

"  Nat.  Bank 

m 

2000 

1§ 

"       do.            86 

15(X1 

« 

22 

"        do. 

87 

2001 

24 

"  W.  Brown 

87 

1745 

m 

•'    liulunce 

35  IS 

26 

"  Sunds. 

87 

1825 
59601 

i 

G960 

- 

1884. 

Dec. 

1 

To  Balance 

i351^ 

Dr. 


Bills  Receivable 


1884.  I 

Nov.  i  l'  To  Stock 
"     I  3   "  Mdse. 


1884. 

Dec.  i  li  To  Balance 


|84:    36(^ 
84    28(^ 

640 


1884. 

Nov.!  3|  By  Mdse.         j84l 
\30    "    Balance 


Or. 


360 

2sn 

m 


Dr. 


1881. 

Nov. 

5 

ti 

24; 

(( 

28 

Bills  Payable 


To  Sunds. 
"   Nat.  Bank 
do. 


85     732i75 

87     200 
,87,  2200 


3132|75 


1884. 

Nov. 


Or. 


By  Stock  84 

"    Mdse.  84 

"    Clark  &  Co.  85 
"    Stone  Mill  85 


277175 
455 
200 
2200 

,3132,76 


Dr. 


Nov. 


12 


To  Sunds. 
"      do. 


Frank  Goodman 


Or. 


m — \ 

84    240 
86    420 

I  i  660100 


Nov  I  1;  By  Stock  l84'    41575 

"     |22,   "    Nat.  Bank  187    244  25 


66000 


90 


COMPLETE  BOOK-KEEPING. 


Dr. 


BsowN  &  Smith 


J3d  Set. 
Or, 


1884.  I      ' 

Nov.  tl  I'D  Stock            8(4 

"  1^    "  Sunds. 

"  22    "      do.             8(7 

"  50    "    Balance 


'         !     I 
210  iio 
165 
L55 

719 


:250C[) 


eo 


l^ov.    3  By  Real  Estate  ^ 


L884. 


250 


1884.      I      J 

pec.    {l  By  Balance 


;  250  00 


7196} 


Dr. 


Interest 


1884. 

Nov.  5  ITo  Sunds 

"  24  I"  Nat.  Bank 

"  2<8  ;"         do.  8)7 

"  30    "    Balance 


L884. 

^ov.    3  By  Mdse. 


1884. 

:)ec. 


1  ^y  Balance 


Cr. 


£4 


25 


25C0 


867 


Dr, 


Wm.  Beowic 


814  |E70 

86  1725 

1905 


0-. 


"~-  L  L 

!Jov.    1  To 


14 


Mdse. 
Sands. 


L884. 

Kov. 


By  Stone  Mill 
"    Cash 


1745_ 
ll|995 


Dr, 


Rbal  Estatb 


Not.    18  ToSands.         H    850 


Dec. 


1  To  Balance 


m. 


000 


Kov.    4  iBy  Mdse. 

30\  ^*    Balance 


1660 

7000 


KO 


ILLUSTRATIVE  WORK, 


91 


2d  Set. 
Dr. 


LKIDGJ-ER. 

Wm.  Clark  &  Co. 


Or, 


1884. 

Nov. 


1884. 

Dec. 


12 
17 


iTo  Sunds. 
Mdse. 
Sunds. 


I  '  To  Balance 


;,)65 


g80 
275 
510 


J65 


^884. 

iVbi'. 


50:  ^i/  Balance 


jm 


1065 


Dr. 


Stone  Mill 


Or. 


1884. 

Nov. 


50, 


fo  Nat.  Bank 
"  Sunds 
"      do. 
"      do. 
"      do. 
!"  Nat.  Bank 
Balance 


8b  1150 

85  ^0 

8b  iilOO 

8jB  1920 

8B  1400 


87 


1450 

190 

tfeio" 


1884.      I 

Ijiov.  10 
J? 


Dec.     I 


%  Sunds.  85  $^40 

F.Goodman 
W.  Brown 
Clark  &  Co. 
Brown  &  S. 
Cash 

Brown  &  S. 
Cash 


By  Balance 


86 
8^^ 
87 
8f7 


"310 


180 

850 

270 

90 

11500 
80 

1J600 


190 


Dr. 


Mebchandisb 


Or. 


1884. 

Nov.  1|7  tToBal. 

"  20 

"  30 


88 
Nat.  'Bank 
Balanrx 


1325 


470 
490 
365 


L884.     II  I      || 

^ov.  ihr  By  Brown  &  S.  86      75 
lis    "  Stone  Mill    86    ^50 


1884. 

Dec. 


22 
2fo 


Brown  &S.  87 
Cash  m 


1   By  Balance 


I  75 
225 


365 


92  COMPLETE  BOOK-KEEPING, 


INSTRUCTIONS— THIRD  SET. 


107.  This  is  an  individual  Set,  and  is  opened  with  a 
Stock  Account,  with  the  Student  (using  his  own  name) 
as  proprietor.  This  set  employs  a  Day  Book,  Journal, 
Ledger,  and  Bill  Book.  A  Sales  Book  and  an  Invoice 
Book — samples  of  which  are  given — are  employed  as 
auxiliaries  to  the  Day  Book.  When  the  Transactions 
do  not  give  the  details,  reference  is  made  in  them  to 
one  of  these  books,  which  furnishes  the  amounts  required 
for  use  in  writing  up  the  Day  Book. 

108.  The  Bank  Account  of  this  Set  is  kept  with  the 
State  Bank,  in  which  all  deposits  are  made,  and  upon 
which  all  checks  are  drawn.  Store  rent  and  Clerk  hire 
are  debited  to  Expense.  Receipts  for  Desk  room  are 
credited  to  this  account.  The  Transactions  furnish  all 
information  needed  in  relation  to  Bills  Receivable  and 
Bills  Payable.  When  bills  are  paid  or  disposed  of,  the 
fact  is  entered  in  the  Bill  Book. 

TRANSACTIONS  OP  THIRD  SET. 

January  Ist,  1885. 

Resources. — I  commence  business  this  day  with  $240 
Cash  in  safe ;  $570  on  deposit  in  State  Bank ;  Merchan- 
dise in  store,  worth  $1460;  and  a  Note  against  Amos 
Dean  for  $412,  dated  Nov.  3,  1884,  on  interest  at  6  per 
cent,  and  due  Jan.  3,  1885.    (See  Note,  page  66.) 

Liabilities, — I  owe  my  Note  of  Dec.  15, 1884,  at  1  mo., 
for  $85;  and  John  Jones  on  acct.  $70. 

Jan.  2d. 

Tram.  J.  Sell  Henry  Brownell,  for  Cash,  Merchandise 
per  Sales  Book.     (Sec  page  98.) 


TRANSACTIONS  OF  THIRD  SET,  93 


Jan.  3d. 

Tr.  2.  Sell  John  Owen,  at  20  days,  Merchandise  per 
Sales  Book. 

Tr.  S.  The  Note  of  Amos  Dean,  this  day  due,  with  In- 
terest, is  paid  in  Cash. 

Jan.  5th. 

Tr.  Jf.  Sell  Otis  Collins,  of  Greencastle,  0.,  Merchandise 
per  Sales  Book.  Receive  his  Note  at  20  days,  drawing 
Interest  at  7  per  cent. 

Jan.  7th. 

Tr.  5.  Sell  J.  W.  Sharp,  of  Delaware,  at  10  days,  Mer- 
chandise per  Sales  Book. 

Jan.  8th. 

Tr.  6.   Buy  of  Van  Antwerp,  Bragg  &  Co.    Merchan- 
dise per  Invoice  Book.     Pay  by  Ck.  $500  and  Cash. 
Tr.  7.   Deposit  $600  in  State  Bank. 

Jan.  9th. 

Tr.  8.  Sell  E.  N.  Hartshorn,  on  his  Note  at  10  days, 
Merchandise  per  Sales  Book. 

Tr.  9.  Sell  John  Smithson,  for  Cash,  Merchandise  per 
Sales  Book,  amount  $570. 

Jan.  10th. 

Tr.  10,  Sell  J.  L.  Wallace,  for  Cash,  Merchandise  per 
Sales  Book,  amount  $214. 

Jan.  12th. 
Tr.  11.  Deposit  $675  in  State  Bank. 


94  COMPLETE  BOOK-KEEPING. 


Jan.  13th. 

Tr.  12.  Buy  of  Van  Antwerp,  Bragg  &  Co.,  Invoice  of 
Merchandise,  amount  $480.     Pay  by  Check.  » 

Jan.  15th. 

Tr.  18.  Give  Jno.  Jones  my  Check  in  payment  of  my 
Note  of  Dec.  15,  and  in  settlement  of  account  with  him. 

Jan.  16th. 
Tr.  U.  SeU  Mdse.  for  Cash,  amount  $327. 

Jan.  17  th. 

Tr.  15.  J.  W.  Sharp  pays  the  amount  due  from  him 
on  account  in  Cash. 

Tr.  16.   Pay  in  Cash  rent  for  Store  for  Jan.,  %^. 

Tr.  17.  Sell  Merchandise  to  J.  W.  Sharp,  per  S.  B. 
Amount  $204.    Receive  $80  in  Cash  :  balance  on  account. 

Jan.  19th. 

Tr.  18,  Buy  for  Cash  Invoice  of  Merchandise.  Amount 
$465.80. 

Tr.  19.  Receive  from  E.  N.  Hartshorn  Draft  on  N.  Y. 
to  take  up  his  Note  of  Jan.  9th. 

Jan.  20th. 

Tr.  20.  Sell  John  Owen  on  acct.  Merchandise,  S.  B. 
$140. 

Tr.  21.  J.  A.  Roys  buys  for  Cash  Merchandise  per  S.  B. 
Amount  $246. 


TRANSACTIONS  OF  THIRD  SET.  95 


Jan.  21st. 

Tr.  22.  H.  C.  Spencer  buys  an  Invoice  of  Mdse.,  which 
he  pays  for  by  N.  Y.  Draft  for  $312. 

Tr.  23.  Hiram  Stilwell  pays  $8.50  for  Desk  Room  in 
office  one  month. 

Jan.  22d. 

Tr.  24.   Deposit  1500  in  State  Bank. 

Tr.  25.   Pay  $175.50  for  Mdse.  per  Invoice. 


Jan.  23d. 

Tr.  26.  Sell  Press  Printing  Co.  Mdse.  per  S.  B.,  $240. 
Settle  the  Company's  Printing  Bill,  amount  $32.50,  and 
receive  the  balance  in  Cash. 

Jan.  24th. 

Tr.  27.  John  Owen  settles  his  account,  allowing  75c. 
for  Interest  on  same.    Pays  in  Cash. 

Jan.  26th. 

Tr.  28.   Otis  Collins  takes  up  his  Note  of  Jan.  5th,  with 
20  days'  Interest  at  7  per  cent,  by  Check. 
Tr.  29.   Deposit  $550.75  in  State  Bank. 

Jan.  27th. 

Tr.  30.  Buy  Merchandise  per  Invoice  Book.  Amount 
$875.40.     Pay  by  Check. 

Jan.  28th. 

Tr.  31.  Receive  from  J.  W.  Sharp,  N.  Y.  Draft  for  $230 
for  his  credit  in  account. 


96  COMPLETE  BOOK-KEEPING. 

Tr.  32.   Fill  J.  W.  Sharp's  order  for  Merchandise  per 
Sales  Book,  amount  $86.50. 


Jan.  Slst. 
Tr.  33.   Pay  clerk  and  porter  for  1  mo.  $90  in  Cash. 


Abstract  of  Inventory. 

January  31^  1885. 

109.  On  taking  an  Inventory,  we  find  on  hand  Mer- 
chandise worth  $1600.03. 

Required  to  determine: 

1st.  The  Trial  Balance  of  January  31,  1885. 
2d.   The  Ledger  Balances  of  January  31,  brought  for- 
ward under  date  of  February  1,  1885. 

Sd.    The  Net  Stock  on  commencing  business. 

4th.  The  Net  Gain  in  trade  for  January. 

5th.  The  Net  Stock,  including  gain,  February  1,  1885. 

6th.  The  Items  of  Resources  and  their  value. 

7th.  The  Items  of  Liabilities  and  their  amount. 

Proof. — The  Resources^  less  the  Liabilities,  should  ex- 
actly equal  the  Net  Stock,  February  1,  1885. 

Remark.— Unless  very  familiar  with  the  principles  involved  in  clos- 
ing the  Ledger,  with  a  view  to  determining  the  gains  and  losses  of  a 
business  and  its  net  result  as  a  whole,  the  student  should  here  care- 
fully review  Arts.  Gl  to  65,  relating  to  this  subject,  in  wliicli  the  prin- 
ciples involved  are  carefully  explained,  and  Arts.  07  to  104,  in  which 
they  are  particularly  applied  in  closing  the  Second  Set.  The  applica- 
tion of  these  same  principles  will  enable  the  student  readily  to  close 
this  Third  Set,  or  any  other  Set  under  like  circumstances,  for  the 
principles  referred  to  are  of  universal  application. 


ANSWERS  OF  THIRD  SET. 


97 


Arts.  1st. 

Dr. 


Trial  Balance. 
January  31st,  1885. 


Or. 


Amounts. 

Balances. 

Accounts. 

L.F. 

Balances. 

Amounts. 

155' 
2895  75 

274  50 
207  50 

2140  91 

1667  37    , 

885 

199 

1116 

351 

35 

41 
12 

Stock 

State  Bank 

Interest 

J.  W.  Sharp 

Expense 

Merchandise 

Cash 

2627 

6 
19 

38 
50 

2082 
2010  40 

5  38 
2941 

8  50 
1024,50 
1316  25 

7341 

03 

2551 

88 

2551 

88 

7341 

03 

Ans.  2d. 

Dr. 


Ledger  Balances. 
February  1,  1885. 


Or. 


Accounts. 

L.F. 

Amounts. 

Accounts. 

WE. 

Amounts. 

State  Bank 

Merchandise 

Cash 

885 

1600 

351 

35 
03 
12 

50 

Stock 

J.  W.  Sharp  - 

2817 
19 

2836 

50 

2836 

50 

Ans.  3d.  The  l^et  Stock,  January  1,  was  $2527. 

Ans.  4th.  The  Net  Gain  for  January  is  290. 

Ans.  5th.  The  Net  Stock,  February  1,  is  2817. 

Ans.  6th.  The  Dr.  Ledger  Balances  amount  to    2836.50 

Ans.  7th.  The  Cr.  Ledger  Balances^  except  Stock     19.50 


Proof. 


B.  K.-7. 


Resources 
Liabilities 
Net  Stock,  as  above 


$2836.50 

19.50 

$2817.00 


98 


COMPLETE  BOOK-KEEPING. 


SALES    BOOK. 
Janimry  2,  1885. 


Henry  Brownell,       Cash,  Columbus. 

84  Rav's  Prac.  Arithmetic  @  $  .50 

6-t  — ^  Higher  Arithmetic  "      .85 

25  Eclectic  Comp.  Geography  "     1.20 

28  Revised  2d    Reader  "      .30 

12 -It h  Reader  "      .50 

Jan.  3. 


John  Owen,         acct.  20  days, 

132  Eclectic  Comp.  Geography 
30  Ray's  Prac.  Arithmetic 
54  White's  Comp.  Arithmetic 

Jan.  5.    . 


City. 


Otis  Collins, 


Note, 


33  Revised  2d    Reader 

56 8d    Reader      * 

56 5th  Reader 

48  Eclectic  Comp.  Geography 

Jan.  7.  . 


J.  W.  Sharp,        acct.  10  days, 


%  $1.20 
"  .50 
"      .65 


Greencastle. 

@      .30 
"      .42 


1.20 


Delaware. 


20  Mayhew'.s  Univ.  Book-keep'g  @  $1.60 
20  Sets  Blanks  do.  "    1.60 

Jan.  9. , 


B.  N.  Hartshorn,       Note,  Mt.  Union. 

24  University  Book-keeping  @  $1.60 

24  Sets  IJhmks        do.  "     1.60 

18  Eclectic  Comp.  Geographv  "     1.20 
20  Ray's  Test  Problems  in  Alg.     "      .50 


42 

54,40 
30)       il 

8  40 

6  14080 


158,40 
15' 
3510 


9,90 
2352 
40,32 
57  60 


208  50 


13134 


64 


38  40 

^ 

3S40 

2160  1 

10 

i 
1 

1          1 

108 

40 


Note. — The  above  sufficiently  illustrates  the  forni  and  use  of  the 
Sales  Book  described  in  Art.  49.  When  this  l)Ook  is  used  the  Day 
Book  entries  may  be  brief,  not  repeating  details.  The  amounts  are 
given  in  the  Transactions  in  the  remainder  of  this  Set,  and  in  Sets 
where  the  Sales  Book  is  not  sliown. 


ILLUSTRATIVE  WORK. 


99 


Ira  Mayhew, 


II^VOICIC   BOOK. 

CiN'CiNNATi,  Ohio,  Jan.  8,  18&5 

Bought  of  Van  Antwerp,  Bragg  &  Co. 

Publishers  Eclectic  Educational  Series. 


144 

192 
96 
40 
87 

144 
72 
48 
48 
24 
48 
24 
48 
72 
84 
72 
12 


Revised  2d    Reader 

3d    Reader 

5th  Ketuler 

Cole's  Institute  Reader 
Ray's  Primary  Arithmetic 
Practical  Arithmetic 

Higher  Arithmetic 

White's  Comp.  Arithmetic 
Ray's  Higher  Algebra 

Test  Problems  in  Alg. 

Elements  of  Astronomy 

Eclectic  Comp.  Geography 

School  Geog.  No.  3 

Harvey's  Language  Lessons 

Rev.  Pract.  Grammar 

Pinneo's  Guide  to  Composition 
Smith's  Eng.  Literature 


@  $ 


.30 
.42 

.72 

.80 

.15 

.50 

.85 

.65 

1.00 

.50 

1.20 

1.20 

1.30 

.20 

.65 

.60 

1.20 

10^0 


Icfc  Cash 
2  Boxes  and  Drayage 

Received  payment, 
Van  Antwerp,  Bragg  &  Co. 


43|20 

80;  64 
6912 
32 


05 


13 
72 
6120 
31|20 
48' 
12i 

57  60 
28  80 
62  40 
14  40 
54  60 
43  20 
1440 
81 


737 
73 


664 


_13  28^ 

650  75 

150 


652 


25 


Note  1. — The  above  sufficiently  illustrates  the  form   of  Invoices 
and  of  the  Invoice  Book.     (See  Art.  107,  Instructions,  3d  Set.) 

Note  2. — See   the  Note,    Art.  51,   for  the  manner  of  making  an 
Invoice  Book  from  Invoices  received. 


100  COMPLETE  BOOK-KEEPING. 

third  set  rewritten, 
With  Cash  Book  and  Journal  Day  Book. 

110.  The  Cash  Book,  as  stated  in  Art.  50,  properly 
contains  a  record  of  all  Cash  received  and  paid  in  con- 
ducting a  business.  When  the  Cash  transactions  are 
few,  the  account  may  be  kept  like  other  accounts,  as 
has  hitherto  been  done  in  this  work.  But  when  they 
become  numerous,  a  separate  Cash  Book  is  of  advantage. 
The  benefits  resulting  from  the  use  of  this  book  will  be 
apparent  from  rewriting  the  Third  Set  from  the  Transac- 
tions, using  a  Cash  Book  and  Journal  Day  Book,  instead 
of  a  Day  Book  and  Journal,  as  directed  in  Art.  107. 

111.  The  form  of  the  Cash  Book  is  shown  on  the  next 
folio,  with  some  of  the  extensions  made,  as  derived  from 
the  Transactions.  The  Cash  Book,  as  here  shown,  is 
essentially  a  Journal,  though  of  special  form.  The  first 
entry  for  Resources,  January  1,  is  "  Cash  Dr.  To  Stock," 
and  should  be  posted  to  the  Cr.  side  of  Stock  in  the 
Ledger.  It  here  stands  on  the  Dr.  side  of  Cash,  this 
book  serving  as  a  Ledger  for  Cash.  The  word  "Invest- 
ment "  is  explanatory,  thus  making  this  book  a  Journal 
Day  Book  for  Cash.  The  "J,"  at  the  right,  indicates  that 
the  remainder  of  the  Resources  belongs  in  the  Journal 
Day  Book,  in  which  the  balance  of  the  entry  is  written 
(Art.  53)   thus : 

State  Bank  Dr.  On  Deposit    $570. 

Merchandise  Inventory       14G0. 

Bills  Receivable  No.  1,  B.  B.    412. 

To  Stock  Investment  $2442. 

With  this  entry  posted,  the  Ledger  is  opened  for  Stock 
and  all  accounts  representing  Resources,  except  Cash, 
which  appears  in  the  Cash  Book, 

112.  The  entry  for  Liabilities  "belongs  entirely  in  the 


THIRD  SET  REWRITTEN.  101 

Journal  Day  Book.  Entries  for  Trans.  1,  3,  and  7  are 
shown  in  the  Cash  Book.  Entries  for  Trans.  2,  4,  and 
5  belong  entirely  in  the  Journal  Day  Book.  Trans.  G 
requires  an  entry  to  each  of  these  books.  With  these 
aids,  the  learner  may  proceed  to  rewrite  this  Set  from 
the  Transactions,  using  the  Cash  Book,  Journal  Day 
Book,  and  Ledger.  The  Bill  Book,  being  unchanged, 
need  not  be  rewritten. 

113.  The  Cash  Book  and  the  Journal  Day  Book  should 
be  posted  in  the  order  of  dates.  The  Ledger  Accounts, 
as  written  up  by  these  two  methods,  will  substantially 
agree.  In  some  cases,  what  was  in  one  sum  by  the  first 
method  will  appear  in  two  items  by  the  second,  coming 
as  they  do  from  two  different  books ;  but  the  results  will 
be  the  same  in  both  cases. 

114.  Brevity. — The  use  of  the  Cash  Book,  as  here  em- 
ployed, saves  work  in  posting  and  space  in  the  Ledger. 
Every  entry  in  the  Cash  Book  belongs  equally  to  two 
accounts.  This  book  being  a  Ledger  for  Cash,  half  of 
the  posting  is  saved.  The  titles  of  account  for  which 
Cash  is  Dr.  are  severally  Cr.,  and  each  item  is  posted  to 
the  Cr.  side  of  its  account  in  the  Ledger.  In  like  manner, 
the  titles  for  which  Cash  is  Cr.  are  themselves  Dr.,  and 
the  items  are  posted  to  the  Ledger  accordingly.  Then, 
by  the  use  of  double  money  columns  for  "  Sundries  "  and 
"Merchandise,"  we  can  enter  the  several  debits  and  credits 
to  Merchandise  in  the  special  Merchandise  columns,  and 
post  the  sum  of  each  such  column  to  the  Merchandise  Ac- 
count of  the  Ledger,  and  thus  save  a  large  part  of  the 
work  of  posting  to  this  account. 

Note. — Only  the  items  entered  in  "Sundries"  column  are  posted. 
Merchandise  entered  in  the  special  column  is  not  posted  till  its  sum 
is  brought  into  "Sundries;"  and  this  is  uniformly  done  only  at  the 
foot  of  a  page,  unless  the  Cash  Account  is  balanced  midway  in  a  page, 
when  the  last  thing  before  balancing  ie  to  enter  the  sums  of  the  Mer- 
chandise items  in  "Sundries"  columns  and  post  them. 


102 


COMPLETE  BOOK-KEEPING. 


Dr. 

cash:  book. 

Cash 

3d  Set. 

1880. 

1 

2 

3 

3 

9 

10 

16 

17 

17 

19 

20 

21 

21 

23 

24 

24 

26 

26 

28 

31 

1 

To  Stock 
"    Merchandise 
"    Bills  Receivable 
"    Interest 
"    Merchandise 
"    Merchandise 
"    Merchandise 
"    J.  W.  Sharp 
"    Merchandise 
"    Bills  Rec. 
'•    Merchandise 
"    Merchandise 
"    Expense 
"    Merchandise 
"    John  Owen 
"    Interest 
"    Bills  Rec. 
"    Interest 
"    J.  W.  Sharp 
"    Merchandise 

Investment  (see  J.) 

S.  B. 

No.  1,  B.  B. 

do. 

J.  Smithson  S.  B. 
J.  L.  Wallace  S.  B. 
S.  B. 
Bal.  acct. 
J.  W.  Sharp  S.  B. 
No.  3,  B.  B. 
J.  A.  Roys  S.  B. 
H.  C.  Spencer  S.  B. 
Desk  room  1  mo. 
S.  B.  (see  .1.) 
Bal.  aoct. 
on  above 
No.  2,  B.  B. 

do. 

on  acct. 
Total  Crs. 

Sunds. 

Mdse. 

Jan. 

240 

412 
4 

12 

140 

- » « 

m 

- 

-- 

2097 

" 

-- 

2097' 
3645 

30 
42 

12 

W 

1880. 

Feb. 

To  Balance 

351 

115.  Proof. — By  writing  up  this  Set  as  here  indicated, 
and  taking  the  Trial  Balance  from  the  Ledger,  with  the 
Cash  balance  from  the  Cash  Book,  the  learner  will  ob- 
tain the  same  results  as  before.  By  comparing  his  work 
in  the  two  cases,  he  will  see  he  has  secured  the  advan- 
tages claimed  in  Art.  114  by  the  use  of  the  Cash  Book 
with  special  Merchandise  columns. 

116.  Special  Columns. — The  special  columns  for  Mer- 
chandise, introduc(Ml  into  the  Cash  Book,  enable  us  to 
post  the  eight  credits  to  Mcrcliandise  in  one  sum,  as  shown 
where  this  sum  is  brought  into  tlic  "Sundries"  Dr.  col- 
umn, and  the  three  debits  to  Merchandise  in  (me  sum^  as 


THIRD  SET  REWRITTEJS. 


103 


3d  Set. 


CASH    BOOK. 

Cash 


Cr. 


1885. 

Jan. 


Bv  Merchandise 
"'  State  Bank 
"    State  Bank 
•'    Expense 
"    Merchandise 
"    State  Bank 
''    Merchandise 
"    State  Bank 
*'    Expense 
"    Merchandise 
"     Balance 


Bal.  Invoice 
Deposit 

do. 
Store  rent 
I.  B. 
Deposit 
I.  B. 
Deposit 
Clerk  hire 
Total  Drs. 


Bunds. 


600 


3645  42 


55 


55 


shown  where  this  sum  is  brought  into  the  "Sundries" 
Cr.  column. 

Note  1. — Special  columns  may  in  like  manner  be  introduced  into 
the  Journal,  or  Journal  Day  Book,  when  found  desirable  for  any  par- 
ticular business.  For  a  retail  merchandising  business,  a  special  column 
may  be  added  for  Merchandise  Crs.,  making  a  three-colnxnn  Journal. 
Instead  of  a  separate  Cash  Book,  Dr.  and  Cr.  columns  might  be  added 
for  Cash,  making  a  ^re-column  Journal.  Other  special  columns  may  be 
added  as  found  desirable,  making  a  six-,  seven-,  or  eight-column  Journal. 

Note  2. — In  the  Cash  Book  here  presented,  the  extensions  are  en- 
tered to  January  8.  After  this  date,  the  positions  the  entries  will 
occupy  are  indicated,  leaving  the  sums  to  be  determined  and  entered 
by  the  student  in  his  Cash  Book  and  Journal  Day  Book,  as  he  pro- 
ceeds in  writing  up  his  work  from  the  Transactions. 


104  COMPLETE  BOOK-KEEPING 


INSTRUCTIONS— FOURTH  SET. 

117.  The  student  associates  with  him  Horace  Hooker, 
and  they  engage  in  business  under  the  firm  name  of 
"The  Student  &  Co."  The  books  are  opened  with  a 
Stock  Account.  The  partners  each  devote  their  time  to 
the  business,  and  agree  to  share  in  the  gains  and  losses 
that  may  arise  from  it  in  proportion  to  their  net  invest- 
ments.    The  Firm  keep  an  account  with  the  City  Bank. 

118.  A  Cash  Book,  Journal  Day  Book,  Ledger,  and  Bill 
Book  are  used  in  writing  up  this  Set.  A  Sales  Book  and 
an  Invoice  Book  (understood  to  be  kept  like  the  sample 
shown  in  the  Third  Set)  would  furnish  the  amounts 
named  in  the  Transactions  referring  to  them,  though 
these  books  are  not  here  shown.  Consignments  and 
Shipments,  introduced  into  this  Set,  are  kept  as  directed 
in  Arts.  36  and  37.  An  "account-sales"  is  an  account  of 
a  Shipment,  rendered  by  the  consignee  to  the  consignor. 
It  should  show  the  receipts  from  sales,  the  charges  of  the 
consignee,  and  the  proceeds  to  which  the  consignor  is 
entitled.  When  received,  the  consignor  should  close  his 
Shipment  account  for  gain  or  loss  into  Profit  and  Loss. 


TRANSACTIONS  OF  FOURTH  SET. 

February  1st,  1885. 

Resources. — The  Student  invests  in  the  business  of 
this  Set  the  Merchandise  on  hand  at  the  close  of  the 
Third  Set,  and  8819.47  in  Cash. 

Horace  Hooker  invests  $776  in  Cash ;  the  Note  of  H. 
Adams,  indorsed  ))y  Ben  Brooks,  dated  August  1,  1884, 
for  $800,  due  February  15th;  and  the  Interest  on  this 
Note  to  this  date.     Interest  at  6  per  cent. 


TRANSACTIONS  OF  FOURTH  SET.  105 

Liabilities. — The  indebtedness  of  the  Student  at  the 
close  of  Third  Set  is  assumed  by  the  Firm. 

Feb.  U, 

Trans.  1.  We  fill  the  order  of  J.  W.  Sharp  for  Merchan- 
dise per  S.  B.,  amount  ^145.75. 

Tr.  2.  Sell  A.  H.  Steadman  Merchandise  per  S.  B., 
amount  $240.  Receive  $80  in  Cash,  and  his  Note  at  10 
days,  payable  at  store,  for  the  balance. 

Feb,  3d. 

Tr.  3.  Receive  from  John  W.  Brown  an  Invoice  of  Mer- 
chandise, to  be  sold  on  his  account  and  risk.  We  pay 
$17.50  in  Cash  for  freight  and  drayage. 

Tr.  Jf.  We  buy  for  Cash  of  Harper  Bros.,  Merchandise 
per  Invoice  Book,  amount  $240.70. 

Feb.  4th. 

Tr.  5.  We  deposit  $975  to  our  credit  in  account  in  the 
City  Bank, 

Tr.  6.  We  buy  of  Wm.  Allen  $2400  worth  of  Mdse.  per 
I.  B.  Give  in  payment  our  Note  at  10  days  for  $2000, 
payable  at  City  Bank,  and  Cash  for  the  balance. 

Tr.  7.  We  ship  Invoice  of  Merchandise,  worth  $1141.40, 
to  Smith  &  Wood,  of  St.  Louis,  to  be  sold  on  our  ac- 
count and  risk.    We  pay  $8.60  shipping  charges  in  Cash. 

Feb.  5th. 

Tr.  8.  Sell  for  Cash  from  Brown's  Consignment  per  S. 
B.,  amount  $214.60. 

Tr.  9.  Sell  to  C.  H.  &  D.  R.  R.  for  Cash,  Merchandise 
per  Sales  Book,  amount  $894.50. 


106  COMPLETE  BOOK-KEEPING. 


Feb.  6th. 


Tr.  10.   Pay  in  Cash,  bill  of  $27  for  advertising. 
Tr.  11.   Sell  to  Homer  Warren  for  Cash,  Merchandise 
per  Sales  Book,  amount  S2 17.30. 
Tr.  12.   Deposit  81000  in  City  Bank. 


Feh.  7th. 

Tr.  13.  Sell  for  Cash  from  Brown's  Consignment  per 
Sales  Book,  amount  $665.40. 

Tr.  14.  Isaac  Smith  buys  of  us  for  Cash  an  Invoice 
of  Merchandise,  amount  $340.15. 


Fd).  9th. 

Tr.  15.  Render  J.  W.  Brown  an  account-sales  of  his 
Consignment,  received  the  3d  inst.,  charging  5  per  cent 
commission  on  sales,  and  remitting  his  net  proceeds  by 
our  Check  on  the  City  Bank. 


Feh.  10th. 

Tr.  16.  Sell  Merchandise  to  Daughters  College,  Har- 
rodsburg,  for  Cash,  amount  $250. 

Tr.  17.  Sell  to  St.  John's  College,  Fordham,  for  Cash, 
Merchandise,  amount  $590. 

Tr.  18.   Deposit  $1640  in  City  Bank. 


Feh.  nth. 


Tr.  19.   Buy  of  Butler  (k  Co.,  on  our  Note  at  10  days, 
Merchandise  per  Invoice  Book,  amount  $1980.75. 


TRANSACTIONS  OF  FOURTH  SET.  107 


Feb.  imh. 

Tr.  20.   Bill  Receivable  No.  2  is  paid  in  Cash. 

Tr.  21.   Sell  for  Cash,  Merchandise  per  Sales  Book,  $280. 


Feb.  IJfth. 

Tr.  22.  Receive  from  Jno.  W.  Brown  an  Invoice  of 
Mdse.  to  be  sold  on  his  account  and  risk.  We  pay  $14.75 
in  Cash  for  freight  and  drayage. 

Tr,  28.   Pay  Bill  Payable  No.  1  by  Check. 

Feb.  16th, 

Tr.  2Jf.  Bill  Receivable  No.  1  is  paid  in  Cash,  with  6J 
months'  interest,  at  6  per  cent. 

Tr,  25.  We  receive  from  Smith  &  Wood,  of  St.  Louis,  an 
account-sales  of  our  Shipment  to  them  of  Feb.  4th.  Our 
net  proceeds  are  $1230,  covered  by  a  sight  Draft  on  New 
York. 

Tr,  26:  Deposit  $950  in  Cash  in  City  Bank. 

Tr.  27,   Buy  for  Cash,  Invoice  of  Merchandise,  $975. 

Feb.  17th. 

Tr,  28,  Ship  to  Smith  &  Wood,  of  St.  Louis,  Invoice 
of  Merchandise  worth  $1240,  to  be  sold  on  our  account 
and  risk.     Pay  $9.20  shipping  charges  in  Cash. 

Tr.  29.  Buy  for  Cash,  of  Van  Antwerp,  Bragg  &  Co., 
Invoice  of  Merchandise,  amount  $870.75. 

Feb.  18th. 

Tr.  SO.  Sell  Thos.  Walker,  on  his  Note  at  10  days,  Mer- 
chandise per  Sales  Book,  amount  $764. 


108  COMPLETE  BOOK-KEEPING. 

Tr.  31.  J.  W.  Sharp  pays  in  Cash  the  balance  our  due 
on  account. 

Feb.  19th. 

Tr.  32.  Sell  to  High  School  for  Cash,  Merchandise  per 
Sales  Book,  amount  $1245.25. 

Tr.  33.  Sell  to  City  Bank  for  Cash,  Merchandise  per 
Sales  Book,  amount  $820.50. 

Tr.  34,  Deposit  in  City  Bank  $2000  in  Cash. 


Feb.  21st. 

Tr.  35.   Pay  Bill  Payable  No.  2  by  Check  on  City  Bank. 

Tr.  36.   Sell  J.  W.  Brown's  Consignment  No.  2  for  $915. 

Tr.  37.  Render  J.  W.  Brown  an  account-sales  of  his 
Consignment  (#  2),  charging  him  5  per  cent  commis- 
sion on  sales,  and  remitting  his  net  proceeds  by  our 
Check. 

Feb.  23d. 

Tr.  38.   Pay  Cash  for  Merchandise  I.  B.  $480. 
Tr.  39.    Buy  Merchandise  of  N.  E.  Publishing  Co.  per 
Invoice  Book,  amount  $2475,  on  our  Note  at  3  days. 


Feb.  24th. 
Tr.  40.  Sell  for  Cash,  Merchandise  per  S.  B.  $437.40. 

Feb.  25th. 

Tr.  41.  Cash  Sales  of  Merchandise  this  day  have  been 
$348.80  per  S.  B. 

Tr,  42.   Pay  Clerk's  wages  for  the  mo.  $76. 


TRANS  A  CTIONS  OF  FO  UR  TH  SET.  109 


Feb.  26th. 

Tr.  4^3.  Receive  from  Smith  &  Wood  an  account-sales 
of  our  Shipment  to  St.  Louis  of  Feb.  17th.  Our  net  pro- 
ceeds $1225  covered  by  sight  Draft  on  N.  Y. 

Tr.  U'  Sell  E.  N.  Hartshorn  on  his  Note  at  10  days, 
Mdse.  per  Sales  Book,  amount  $210. 

Tr.  JfO.   Take  up  our  Note  No.  3  this  day  due. 


Feh.  27th. 

Tr.  Jfi.  Deposit  to  our  credit  in  account,  in  the  City 
Bank,  at  its  face,  Bill  Receivable  No.  3,  due  on  the  28th. 

Tr.  47,  Pay  bills  for  advertising  and  fuel  and  lights 
for  the  month,  amount  $135.e50. 


Feb.  28th. 

Tr.  48.   Cash  Sales  of  Mdse.  for  the  day  amount  to 
$737.40,  per  Sales  Book. 

Tr.  49.   Pay  $85  for  store  rent  for  the  month. 
Tr.  50.  Receive  $10  for  desk  room  in  office. 


Abstkact  of  Inventory. 

February  28th,  1885. 

119.  On  taking  an  Inventory  of  goods  remaining  un- 
sold, we  find  Merchandise  worth  $2249.23.  The  partners 
are  credited  in  account  for  their  respective  shares  of  the 
Tiet  gain  of  the  business,  as  provided  for  in  Art.  117. 
The  Student's  share  of  gain  is  then  taken  in  a  Check 
on  the  City  Bank,  and  one  half  of  Horace  Hooker's 
share  is  taken  in  Cash,  the  other  half  remaining  tem- 
porarily to  his  credit  in  account. 


110 


COMPLETE  BOOK-KEEPING. 


Required  to  determine :  f 

1st.  The  Trial  Balance  of  February  28,  1885. 
2d.   The  Ledger  Balances  of  March  1,  after  having  ad- 
justed the  partners'  accounts  as  provided  for  in  Art.  119. 
3d.   The  items  of  Resources  and  their  value. 
4th.  The  items  of  Liabilities  and  their  amount. 

Note. — The  Resources  and  Liabilities  of  the  business  have  changed 
in  it€ms,  but  the  net  Stock  remains  the  same.  The  net  gain  of  the 
business  has  been  paid  over  to  the  partners,  according  to  agreement, 
one  of  whom,  for  a  time,  leaves  half  of  his  share  with  the  Firm  to  his 
credit  in  account. 


Ans.  1st. 
Dr, 


Trial  Balance. 
February  28th,  1885. 


Amounts.       Balances. 


L.  Fj  I   Balances. 


€fr. 


Amounts. 


1«60 
11002123 
1934| 

24! 
73291 
32250 

24|20 
13209102 

33864  45 


1099  78 
210 

1675  25 
312  50 


850,02 
4147I55 


I        I 


Stock 

Merchandise 
Bills  Rec. 
Interest 
City  Bank 
Expense 
Commission 
Profit  &  Loss 
Cash 


4000 
2 


.89|75 
65,80 

4147|55_ 

I 


4019  50 
9902  45 
1724 

26 
6653  75 

lOi 

8975 

8« 
I2359I 

33864  45 


Atis.  2d. 
Dr. 


Merchandise 
Bills  Rec. 
City  Bank 
Cash 


Ledger  Balances. 
March  1,  1885. 


Or. 


A 


Amounts. 


2249  23 

210 
1084  55 

653112 

4190  90 


Aooounts. 


Stock 

H.  Hofjker 


L.pJ|  Ar 


Amounts. 


OPENING  AND  CLOSING  BOOKS.  HI 

Ans.  Sd.  The  Dr.  Ledger  Balances;  amount  $4196.90. 
Am.  4th.  The  Or.  Ledger  Balances,  except  Stock ;  amount 
$196.90. 

OPENING  AND  CLOSING  BOOKS. 

120.  The  opening  of  a  set  of  books,  as  required  for  a 
particular  business,  so  as  to  make  the  accounts  arising 
conform  to  the  facts  in  the  case,  is  the  first  difficulty 
encountered  by  the  inexperienced  book-keeper,  and  pre- 
sents a  problem  that  often  perplexes  accountants  of 
years  of  experience.  This  done,  the  current  entries  for 
recording  ordinary  business  transactions  are  compara- 
tively easy. 

121.  The  closing  of  a  set  of  books  by  eliminating  the 
gains  and  losses  that  have  arisen  in  a  business,  and  de- 
termining its  net  result  as  a  whole,  is  a  more  difficult 
problem,  and  one  requiring  greater  skill  for  its  solution. 
But  book-keepers  and  business  men  ought  to  be  able 
readily  to  solve  such  questions.  And,  determining  the 
net  result  of  a  business  and  the  value  of  Stock  at  its 
close,  they  should  be  able  to  prove  the  accuracy  of  their 
work  by  showing  that  the  Resources  of  the  business  are 
enough  to  meet  its  Liabilities  and  leave  the  value  called 
for  by  the  Stock  Account. 


EXAMPLES  FOR  PRACTICE. 

122.  The  following  examples  for  practice  will  give  the 
learner  additional  drill  in  both  opening  and  closing  sets 
of  books,  as  taught  in  Arts.  57  to  66,  and  as  required 
under  varying  circumstances,  thus  increasing  his  famil- 
iarity with  these  more  difficult  processes,  and  enabling 
him  to  enter  upon  the  work  of  recording  actual  business 
transactions  with  better  assurance  of  success. 


112  COMPLETE  BOOK-KEEPING. 


Example  I.    Opening. 

Let  the  Student  commence  business  with  the  follow- 
ing Resources  and  Liabilities,  and  open  his  books  with 
a  Stock  Account: 

Resources. — $260  of  Cash  in  hand ;  on  deposit  in  the 
State  Bank,  $2500;  Merchandise,  per  Inventory,  worth 
S1200;  a  Note  of  $200,  made  by  Thos.  Brown;  Real 
Estate  worth  $4500;  and  a  balance  of  $140  due  from 
Hiram  King  on  account. 

Liabilities. — There  is  outstanding  the  accepted  Draft 
of  H.  Boomer  for  $260,  due  in  ten  days;  and  a  credit 
balance  to  Homer  Warren  of  $40  on  book  account. 

Required  to  determine: 

Id.  The  Journal  entry  for  Resources. 
2d.   The  Journal  entry  for  Liabilities. 
3d.  The  net  value  of  Stock  in  trade. 


Example  II.    Closing. 

123.  The  business  introduced  in  the  last  example  (Art. 
122)  is  carried  on  for  the  period  of  one  year,  during 
which  time  Merchandise  is  bought  and  sold,  and  Real 
Estate  dealt  in.  Personal  accounts  are  opened  and 
closed.  Notes  are  given  to  others,  and  received  from 
others,  a  portion  of  which  are  paid.  These  facts  are 
stated  to  indicate  how  the  accounts  became  in  the  con- 
dition here  shown.  It  is  evident  the  amount  of  work 
done  during  this  period  can  have  no  effect  on  the  process 
of  closing.  At  the  end  of  the  year  a  Trial  Balance  is 
taken,  and  an  Inventory  of  Merchandise,  Real  Estate, 
and  Expense  on  hand,  with  the  following  results: 


OPENING  AND  CLOSING  BOOKS. 


118 


i?r. 

Trial  Balance. 

Or. 

Cash 

State  Bank 
Real  Estate 
Expense 
Profit  &  Loss 
Bills  Receivable 

410 

3560 

2880 

970 

180 

1920 

Stock 

Merchandise 
Bills  Payable 
Interest 
0.  Powers 

8500 
380 
560 
240 
240 

9920 

9920 

Inventory. — The  Inventory  shows  Merchandise  on 
hand  worth  S2340;  Real  Estate  worth  $3120;  and  vari- 
ous articles  charged  to  Expense  worth  $250. 

Required  to  determine: 

1st.  The  Journal  entries  for  closing. 

2d.  The  Ledger  Balances,  after  eliminating  from  the 
speculative  accounts  of  the  Ledger,  as  shown  by  the 
Trial  Balance  and  Inventory,  all  measures  of  gain  and 
loss. 

3d.  Name  the  titles  of  accounts  representing  Resources j 
the  value  belonging  to  each  particular  title,  and  the 
amount  of  the  whole. 

4th.  Name  the  titles  representing  Liabilities^  with  the 
amount  of  each  and  of  the  whole. 

5th.  From  the  amount  of  Resources  take  the  amount 
of  Liabilities,  and  show  that  the  remainder  equals  the 
Stock  invested  plus  the  gain  during  the  year. 


Example  III.    Opening. 

Partnership  without  Stock  Account. 

124.  The  Student  enters  into  copartnership  with  E.  N. 
Hartshorn,  and  they  continue  the  business  of  the  last 

B.  K.-8. 

113 


114 


COMPLETE  BOOK-KEEPING. 


example  under  the  firm  name  of  The  Student  &  Co. 
The  Student  invests  the  Resources  of  the  business  just 
closed,  the  firm  assuming  its  Liabilities.  E.  N.  Harts- 
horn invests  $5000  worth  of  Merchandise  and  $2500  in 
Cash,  and  the  Firm  assumes  a  $300  Note  outstanding 
against  him.  The  partners  are  to  share  in  gains  and 
losses  in  proportion  to  their  net  investments. 

Required  to  determine: 

1st.  The  Journal  entries  for  The  Student's  Resources 
and  Liabilities. 

2d.  The  Journal  entries  for  E.  N.  Hartshorn's  Resources 
and  Liabilities. 

3d.  The  Tiet  investment  of  each  partner. 

4th.  The  net  value  of  Capital  in  the  business. 


Example  IV.    Closing. 

Partnership  without  Stock  Account. 

125.  The  business  of  the  last  example  (Art.  124)  is 
conducted  one  year.  During  this  time  the  Firm  have 
bought  and  sold  over  $40,000  worth  of  Merchandise,  and 
nearly  $60,000  worth  of  Real  Estate.  A  Trial  Balance 
and  Inventory  are  taken  at  the  close  of  the  year,  with 
the  following  results: 


J>r, 


Tbial  Balanob. 


Or, 


Cash                                     860 

The  Stadent 

10800 

Slate  Bank 

14500: 

E.  N.  Hartshorn 

7200 

EXIK'USC 

7a5 

Merchandise 

250 

Bills  Receivable 

1668 

Keal  Estate 

315 

Personal  Accounts 

1260 

Profit  &  Loss 

508 

19073 

19073 

EQUATION  OF  PAYMENTS.  116 

Inventory. — The  Inventory  now  taken  shows  on  hand 
Merchandise  worth  $5140,  and  Real  Estate  worth  $4692. 

Required  to  determine: 

1st.  The  Journal  entries  for  closing. 

^d.  The  Ledger  Balances,  after  eliminating  from  the 
speculative  accounts  of  the  Ledger,  as  shown  by  the 
Trial  Balance  and  Inventory,  all  measures  of  gain  and 
loss,  and  entering  the  net  result  to  the  partners'  accounts, 
as  provided  in  Art.  124. 

3d.  Name  the  titles  of  accounts  representing  Resources, 
the  value  of  each,  and  the  amount  of  the  whole. 

4th.  Name  the  titles  representing  Liabilities^  with  the 
amount  of  each  and  of  the  whole. 

5th.  From  the  amount  of  the  Resources  take  the  amount 
of  the  Liabilities,  and  show  that  the  remainder  equals 
the  net  Stock  standing  in  the  names  of  the  partners. 


EQUATION  OF  PAYMENTS. 

126.  Equation  of  Payments  is  finding  the  average  time 
for  the  payment  of  a  whole  debt,  where  several  sums 
become  due  at  different  times,  so  that  neither  party  shall 
sustain  loss. 

Note  1.— This  average  time  is  intermediate  among  the  several  times, 
or  dates,  for  partial  payments,  and  so  fixed  that  the  gain  to  the  debtor 
from  retaining  one  or  more  sums  after  they  become  due,  shall  exactly 
equal  the  loss  by  him  from  paying  one  or  more  other  sums  before  they 
become  due. 

Note  2. — The  method  of  ascertaining  this  average  time  recognizes 
that  the  product  of  any  sum  of  money  into  the  time  it  is  used  is  a 
measure  of  its  worth.  Thus,  the  use  of  $12  for  2  months  is  equal  to 
that  of  $8  for  3  months,  or  $6  for  4  months ;  for  the  product  of  each 
sum  into  its  time  is  24,  the  measure  of  its  worth. 

Example  1. — John  Doe  owes  me  ^560,  of  which  $320 
becomes  due  in  1  month,  $160  in  3  months,  and  $80  in 


Operation. 

Amt. 

Mos, 

,  Prod. 

320 

X  1 

=  320 

160 

X  3 

=  480 

80 

X  4 

=  320 

560 

1120 

1120 

-560  = 

-2Ans. 

116  COMPLETE  BOOK-KEEPING. 

4  months.  He  proposes  to  pay  the  whole  at  one  time, 
to  which  I  consent.  How  long  before  payment  of  the 
whole  should  be  made,  so  that  neither  party  shall  sus- 
tain loss?  Arts.  2  months. 

t  Explanation.— The  use  of  $320  for  1  month  is 
equal  to  that  of  $1  for  320  months.  The  use  of 
$1G0  for  3  months  is  equal  to  that  of  $1  for  480 
months.  And  the  use  of  $80  for  4  months  is  equal 
to  that  of  $1  for  320  months.  The  entire  interest 
or  use  of  these  several  sums  when  due  will  hence 
be  equal  to  that  of  $1  for  1120  months,  or  of  $560 
for  as  many  months  as  560  is  contained  times  in 
1120,  which  is  2  months.     Hence, 

127.  To  find  the  average  time  for  payment  of  a  whole 
debt,  where  several  payments  become  due  at  different 
times, 

Multiply  each  partial  payment  by  the  time  before  it  becomes 
due.  Divide  the  sum  of  the  products  thus  obtained  by  the 
whole  debt,  and  the  quotient  will  be  the  average  time  of  pay- 
ment 

Note.— When  one  of  the  payments  is  due  at  once,  the  time  to  elapse 
before  payment  being  0,  the  product  becomes  nothing;  but,  in  finding 
the  sum  of  the  payments  for  a  divisor,  this  payment  must  be  added 
with  the  others. 

Example  2.  I  buy  a  farm  for  $6000,  upon  the  follow- 
ing terms :  one  third  of  the  purchase  to  be  paid  in  cash, 
one  half  of  the  remainder  in  12  months,  and  the  balance 
of  the  purchase  in  18  months,  without  interest.  What 
would  be  the  equated  time  for  the  payment  of  the  whole 
at  once?  Ans.  10  months. 

Example  3.  In  case  the  first  payment  had  been  made 
in  cash,  in  the  last  example,  what  would  be  tho  equated 
time  for  the  two  remaining  payments? 

Ans.  lo  months. 

Example  4.  A  merchant  buys  an  invoice  of  goods 
amounting  to  $1800,  to  be  paid  for  as  follows :  $490  in 


AVERAGE  DATE  OF  BILLS.  117 

cash  at  the  time,  $300  in  30  days,  $510  in  60  days,  and 
the  remainder  in  90  days.  What  would  be  the  equated 
time  for  the  payment  of  the  whole  at  once? 

A71S.  47  days. 

128.  The  Average  Date  of  several  bills  of  varying 
amounts  and  bearing  different  dates,  may  be  determined 
on  the  principle  of  Equation  of  Payments,  just  explained. 

Note. — In  case  several  bills  are  made  under  different  dates,  and  it 
becomes  desirable  to  cover  the  amount  of  them  all  by  an  interest- 
bearing  note,  the  average  date  of  these  bills  will  be  the  proper  date  of 
the  note,  or  the  time  from  which  interest  should  be  reckoned. 

129.  The  Term  of  Credit  is  the  time  allowed  for  the 
payment  of  merchandise  bought  on  account,  and  varies, 
depending  upon  local  usage  and  the  line  of  goods  dealt  in. 

Note. — Some  business  houses  do  a  strictly  cash  business,  and  give 
no  credit.  Others  allow  a  uniform  term  of  credit  for  30,  60,  or  90 
days;  while  still  others  allow  varying  terms  of  credit  for  different 
kinds  of  merchandise. 

130.  A  Poeal  Date  is  a  date  to  reckon  from,  adopted 
for  convenience  in  computing  averages.  It  is  chiefly 
used  in  determining  the  average  date  of  bills,  or  their 
average  term  of  credit.  The  earliest  or  the  latest  date 
of  the  several  bills  averaged  is  usually  employed.  The 
result  is  the  same  whatever  focal  date  is  taken. 

131.  To  find  the  average  date  of  several  bills  of  various 
amounts  and  bearing  different  dates, 

Consider  the  date  of  the  earliest  bill  a  focal  date.  Reckon 
the  time  between  this  focal  date  and  the  date  of  each  of  the 
several  bills.  Multiply  each  bill  by  its  time,  and  divide  the 
sum  of  the  products  by  the  amount  of  the  several  bills;  the 
quotient,  added  to  the  focal  date,  will  give  the  average  date 
required. 

Note  1. — In  case  tlie  latest  date  of  a  bill  is  employed  as  a  focal  date, 
the  quotient  must  be  subtracted  from  it  to  obtain  the  average  date  of  the 
several  bills. 


118  COMPLETE  BOOK-KEEPING. 

Note  2. — When  an  example  of  this  kind  has  been  worked,  using 
the  earliest  date  of  a  bill  as  the  focal  date,  it  may  be  proved  by  using 
the  latest  date  for  a  focal  date. 

132.  To  find  the  average  term  of  credit  of  several  bills 
of  various  amounts  and  different  terms  of  credit, 

Multiply  the  amount  of  each  bill  by  its  term  of  credit^ 
expressed  in  mx)nths  or  days.  Divide  the  sum  of  the  products 
by  the  amount  of  the  bills,  and  the  quotient  will  be  their 
average  term  of  credit. 

Note. — The  same  principle  enables  us  to  determine  when  several 
bills  having  different  terms  of  credit,  average  due.  First,  note  when 
the  bills  severally  become  due,  when  the  process  becomes  the  same 
as  given  in  Art.  127. 

Examples  for  Practice. 

Example  1.  A  merchant  sells  a  bill  of  goods,  amount 
S1800,  of  which  $900  is  payable  in  4  months,  $450  in  6 
months,  and  the  remainder  in  8  months.  What  is  the 
average  term  of  credit?  Ans.  5 J  months. 

Example  2.  Bought  of  John  Thompson  4  Invoices  of 
Merchandise,  as  follows : 

No.  1.  Jan.     4,  Amount  $172.50 

No.  2.  Jan.     8,  Amount    361.50 

No.  3.  Jan.  12,  Amount    420. 

No.  4.  Jan.  20,  Amount    540. 

What  is  the  amount  of  the  whole  purchase?  and  what 
its  average  date  ? 

Ans,  Amount  $1494.     Average  date,  Jan.  13. 

Example  3.  Several  Bills  have  been  bought  on  terms 
of  credit  as  noted  below,  to  wit : 

No.  1.  $145,  Term  of  Credit    7  days. 

No.  2.  723,  do.  do.     15  do. 

No.  3.  820,  do.  do.     24  do. 

No.  4.  1080,  do.  do.     40  do. 


EQUATION  OF  ACCOUNTS. 


119 


What  is  the  average  term  of  credit  of  the  whole  pur- 
chase? Ans.  27  days. 

Example  4.    Sold  Wm.  Williams  5  Invoices  of  Mdse., 
under  dates  and  on  terms  of  credit  noted  below,  to  wit : 

No.  1.   Jan.     2,  $395,  with  credit  of    5  days. 
Jan.     4,    500,         do.  10    do. 

Jan.     7,     305,         do.  20    do. 


No.  2. 
No.  3. 
No.  4. 

No.  5. 


Jan.  10,     200, 
Jan.  15,     100, 


do. 
do. 


10 
5 


do. 
do. 


He  wishes  to  cover  the  amount  of  these  several  In- 
voices by  his  Note,  bearing  interest,  under  the  date  when 
these  several  purchases  average  due.  What  should  be  the 
date  of  his  Note?  Ans.  Jan.  16. 


EQUATION  OF  ACCOUNTS. 

133.  Equation  of  Accounts  is  finding  the  equitable 
time  for  the  payment  of  the  balance  of  an  account  hav- 
ing both  debits  and  credits.  Its  consideration  properly 
follows  that  of  Equation  of  Payments. 

Note  1. — The  debit  and  credit  sides  of  every  account  may  each 
be  brought  to  an  average  date,  by  equation,  as  explained  in  Arts. 
126  and  127.  Should  these  dates  be  the  same,  the  balance  will  be 
then  due. 

Note  2. — The  average  date  of  the  larger  side  of  every  account  re- 
quiring equation  must  then  be  either  later  or  earlier  than  the  average 
date  of  the  smaller  side,  as  here  shown : 


Dr. 


William  Brooks 


Cr. 


July   26 


2000 


20001 


July 


1  By  Mdse. 

19  Balance 


1375! 

625 

2000 


120 


COMPLETE  BOOK-KEEPING. 


Dr. 

William  Bbooks 

Cr. 

I 

July 

I  To  Mdse. 

1 

2000 

July  26  By  Mdse. 

May      7     '•     Bahuirc 

1      1 

1375 

625 

r 

i 

1 

Note  3. — In  the  first  of  these  accounts,  on  July  26th,  we  have  had 
from  Brooks  the  use  of  $1375  for  25  days.  (From  July  1st  to  July 
26th.)  He  is  therefore  entitled  to  retain  the  balance  of  $625  for  55 
days ;  for  1375  X  25  -^  625  =  55 ;  and  55  days  after  July  26th  is  Sept. 
19th,  when  the  balance  of  account  becomes  due  by  equation. 

Note  4. — In  the  second  account,  of  the  $2000  Brooks  had  from  us 
July  1st,  he  pays  $1375  in  25  days.  He  therefore  ought  to  allow  us 
use  on  the  balance  ($625)  not  only  since  July  1st,  when  he  received  it, 
but  for  55  additional  days,  or  from  May  7th,  to  compensate  for  the  use 
of  $1375  for  25  days.     And  so  generally.     Hence, 

134.  To  find  when  the  balance  of  an  account  is  due  by 
Equation, 

let.   Find  the  average  date  of  each  side  of  the  account. 

2d.  Then  multiply  the  smaller  side  of  the  account  by  the 
number  of  days  between  its  date  and  the  daie  of  the  larger 
side^  and  divide  the  product  by  the  balance  of  the  account; 
the  quotient  will  indicate  the  time  when  the  balance  is  due^ 
reckoning  from  the  date  of  the  larger  side  of  the  account. 
When  the  larger  side  has  the  later  date,  the  time  must  be 
ADDED,  or  counted  forward;  but  when  it  has  the  earlier 
date,  the  time  must  be  subtracted,  or  counted  backward. 

Note.— In  finding  the  exact  time  between  two  dates,  as  required  in 
working  these  examples,  the  Time  Table  on  page  126,  and  Art.  140, 
explaining  its  use,  may  be  consulted. 

Example  1.  When  do  the  debits  and  when  the  credits 
of  the  following  account  average  due?  And  when  docs  the 
balance  of  the  account  become  due  by  Equation  ? 

AnJi.  Debits  Feb.  28;  Credits  March  22;  Bal.  Jan.  28. 


EQ  UA  TION  OF  A  CCO  UNT8. 


121 


Dr. 


John  Bbown  &  Sons 


O. 


Jan. 

— 
3 

To  Mdse. 

320 

Feb. 

2 

By  Cash 

Uv. 

— 

Feb. 

17 

"     do. 

850 

Mar. 

4 

"    Mdse. 

,  378 

Mar. 

11 

"     do. 

j  200 

Apr. 
May 

24 

"    Cash 

400 

Apr. 

6 

"     do. 

1  300 

6 

•'     do. 

125 

May 

17 

"     do. 

180 

■ 

Example  2.  From  what  date,  in  equity,  should  in- 
terest be  computed  on  settlement  of  the  following  ac- 
count with  A.  H.  Steadman?  Ans.  Sept.  5. 


Dr. 


A.  H.  Steadman 


O. 


May 

5  To  Mdse. 

200 

May 

14 

By  Cash 

!l50 

— 

June 

16l   "     do. 

300 

June 

16 

"    Mdse. 

500 

July 

8    "     do. 

428 

July 

10 

"    Cash 

300 

Aug. 

15    "     do. 

474 

Aug. 

17 

"     do. 

400 

Sept. 

10.   "     do. 

353 

Note. — The  same  result  will  be  obtained  whether  this  example  is 
worked  as  directed  in  Art.  134,  or  by  the  following  Short  Method, 
which  will  now  be  readily  understood. 

135.  Short  Method  for  finding  when  the  balance  of  an 
account  is  due  by  Equation  : 

Take  the  date  of  the  latest  item  of  the  account  for  a  focal 
date.  Multiply  each  item  of  the  account,  both  debit  and 
credit,  by  the  number  of  days  between  its  date  and  the  focal 
date.  Add  the  debit  and  credit  products  separately,  and  sub- 
tract the  less  amount  from  the  greater.  Divide  their  differ- 
ence by  the  balance  of  the  account,  and  the  quotient  will  indi- 
cate the  time  ichen  the  balance  of  the  account  is  due,  reckoning 
BACKWARD  from  the  focal  date  when  the  balance  of  'Htems^^ 
and  the  balance  of  ^^ products"  are  on  the  same  side,  and 
FORWARD  when  on  opposite  sides. 

Note. — ^The  earliest  date  ot  an  account  might  be  taken  as  a  focal 
date,  when  the  quotient  indicating  when  the  balance  of  account  is 


122 


COMPLETE  BOOK-KEEPING. 


due  would  be  reckoned  forward  from  the  focal  date,  in  case  the  bal- 
ance of  "items"  and  of  "products"  appear  on  the  same  side,  and 
backward  when  on  opposite  sides. 

Example  1  under  Art.  134,  worked  by  the  Short  Method, 
will  be  as  follows,  May  17th  being  the  Focal  Date : 


DeUts. 


Operation. 


Credits. 


Items. 

Days. 

Products. 

Items.        Days.        Products. 

320     X 

134     = 

42880 

250    X    104    =    26000 

850    X 

89     = 

75650 

378    X      74    =    27972 

200    X 

67     = 

13400 

400    X      23    =      9200 

300    X 

41     = 

12300 

125    X      11    =      1375 

180     X 

0 

1153                          64547 

1850 

144230 

Dr.  Items    1850 

Cr.  Products 

64547 

Cr.  Items    1153 

Difference 

79683 

Difference     697 

79683  ^  697  =  114  days.    And  114  days  backward  from  May  17th  is  Jan. 
23d,  when  the  balance  of  the  account  is  due ;  the  same  as  before. 

Explanation. — Reckoning  from  the  latest  date  as  a  focal  date,  the 
Browns  have  had  the  use  of  the  first  item,  $320,  1.34  days,  which  is  the 
equivalent  of  $1  for  42880  days ;  and  so  for  the  other  Dr.  items,  making 
the  whole  equivalent  to  the  use  of  $1  for  144230  days.  Their  Cr.  items 
are  together  equivalent  to  the  use  of  $1  for  64547  days,  leaving  a  Dr. 
excess  equivalent  to  the  use  of  $1  for  79683  days,  or  of  $697  for  114 
days.  The  balance  of  account  is  therefore  due  114  days  backward  from 
the  focal  date,  or  January  2.3d,  as  before. 

Example  1.  When  would  the  balance  of  the  following 
account  average  due?  Ans.  April  26. 

Dr.  John  M.  Sutton  Or. 


Mar. 

14 

To  Md»e. 

375 

May 

18 

By  Cash 

376! 

June 

6 

"     do. 

250 

June 

8 

"    Mdse. 

700! 

July 

5 

*♦     do.                  j 

600 

July 

6 

"    Cash 

160 

•t 

10 

! 

175 

Example  2.  What  should  be  the  date  of  a  Note,  bear- 
ing interest,  to  be  given  in  the  settlement  of  the  follow- 
ing account?  Ans.  Jan.  6, 


CASH  BALANCE. 


123 


Dr. 


J.  Geo.  Cross 


Or. 


Jan. 

15 

To  Mdse. 

150 

Jan. 

25 

By  Cash 

300 

(( 

25 

"  do. 

180 

Feb. 

4 

"  Mdse. 

200 

Feb. 

7 

"  do. 

210 

n 

25 

"  Cash 

150 

{( 

18 

"  do. 

164 

50 

Mar. 

7 

"  Mdse. 

200 

Mar. 

3 

"  do. 

300 

" 

10 

"  Cash 

275 

(( 

10 

"  do. 

205 

50 

Example  3.  What  is  the  average  date  for  the  payment 
of  the  balance  of  this  account  ?  Ans.  May  6. 


Dr. 


J.  C.  Weldon 


(V. 


Jan. 

15 

To  Mdse. 

300 

Jan. 

9 

By  Mdse. 

400 

(( 

27 

"  do. 

250 

a 

28 

"  do. 

350 

** 

29 

"  do. 

642 

Feb. 

20 

"  do. 

618 

Feb. 

11 

"  do. 

400 

(( 

28 

•'  do. 

720 

a 

16 

•'  do. 

320 

Mar. 

16 

"  do. 

562 

" 

27 

"  do. 

150 

Mar. 

19 

"  do. 

310 

CASH  BALANCE. 


136.  The  Cash  Balance  of  an  account  is  the  balance 
due  in  Cash  at  any  required  date,  including  both  debits 
and  credits,  and  the  interest  arising  on  them  severally, 
to  the  time  when  the  balance  is  required. 

137.  To  find  the  Cash  Balance  of  an  account  at  any 
required  date. 

Compute  interest  on  the  several  debit  and  credit  items  of 
the  account,  from  the  date  of  each  to  the  time  of  settlement. 
Enter  the  balance  of  the  interest  to  the  proper  side  of  the  ac- 
count. The  balance  then  taken  will  be  the  balance  of  account, 
including  both  principal  and  interest. 


124 


COMPLETE  BOOK-KEEPING. 


Note  1. — This  method  of  ascertaining  the  Cash  Balance  of  an  ac- 
count is  based  upon  the  principle  that  in  settlement  each  party  to  the 
account  is  entitled  to  credit  for  the  payments  he  has  made,  and  for 
interest  on  them  to  the  time  of  settlement. 

Note  2. — When  the  balance  of  interest  is  on  the  same  side  with  the 
balance  of  account,  add  the  balance  of  interest  to  obtain  the  correct 
Cash  Balance ;  when  on  the  opposite  side  from  the  balance  of  account, 
subtract  to  obtain  the  correct  balance. 

Example  1.  In  case  the  account  with  John  Brown  & 
Sons,  in  Example  1,  Art.  134,  was  settled  July  1st,  what 
would  be  its  Cash  Balance  at  that  date,  with  Interest  at 
6  per  cent?  Ans.  $715.26. 

Dr.  John  Brown  &  Sons  Or. 


Date. 

Items. 

Time. 

Int. 

Date. 

Items. 

Time. 

Int. 

Jan. 

3 

$320 

179 

9 

42 

Feb. 

2       $250 

149 

•6 

12 

Feb. 

17 

850 

134 

18 

72 

Mar. 

4         378 

119 

7 

39 

Mar. 

11 

200 

112 

3 

68, 

Apr. 

24         400 

68 

4 

47 

^? 

6 

300 

86 

4 

24 

May 

6i        125 

66 

1 

15 

17 

180 

45 

1 

33 

Jnhj 

lBal.715.26\Bal.Int. 

11 

26 

1 

18.26 
1868.26 

Cash  I 

37 
al. 

39 

87 

38 

1868.26 

July 

715.26 

138.  The  foregoing  is  submitted  as  a  convenient  form 
for  writing  up  this  and  like  examples.  The  time  of  set- 
tlement, July  1st,  is  taken  as  a  Focal  Date,  and  columns 
are  provided  for  Time  and  Interest,  in  order  to  keep  the 
work  compact.  Interest  for  any  number  of  days  is  ob- 
tained by  multiplying  one  year's  interest  by  the  required 
number  of  days,  and  dividing  the  product  by  365,  the 
number  of  days  in  a  year. 

139.  Short  Method  for  obtaining  the  Cash  Balance  of 
an  account  current : 


SHORT  METHOD. 


125 


Multiply  1  per  cent  of  each  debit  and  credit  item  of  the 
account  by  the  number  of  days  from  its  date  to  the  day  of 
settlement.  Add  the  d^bit  and  credit  products  separately, 
and  take  the  less  amount  from  the  greater.  Multiply  the  re- 
mainder by  the  number  denoting  the  rate  per  cent,  and  divide 
the  product  by  365.  The  quotient  will  be  the  balance  of  in- 
terest required.  This  balance  of  interest  entered  to  the  proper 
side  of  the  account  will  give  the  Cash  Balance  required. 

Example  1,  Art.  137,  worked  by  the  Short  Method: 

Dr.  Products.  Cr.  Products. 


3.2    X     179    = 

572.8 

2.5      X     149    =    372.5 

8.5    X     134    = 

1139. 

3.78    X     119    =    449.82 

2.       X     112    = 

224. 

4.         X      68     =    272. 

3.      X      86    = 

258. 

1.25     X      56     =      70. 

1.8    X      45    = 

81. 

Cr.  Products     1164.32 

Dr.  Products 

2274.8 

Cr.  Products 

1164.32 

1110.48  X  6  ^  365  =  18.25,  the  Dr. 

Remainder 

1110.48 

balance  of  Interest. 

Note. — This  process  is  essentially  the  same  as  that  in  Art.  137,  but 
shortened,  by  first  taking  1  per  cent  of  each  item  on  which  interest  is 
computed  (done  by  removing  the  decimal  point  two  places  to  the 
left),  and  then  again  by  multiplying  the  difference  between  the  Dr. 
and  Cr.  products  by  the  rate  per  cent  and  dividing  by  365,  thus  sav- 
ing several  multiplications  and  divisions,  and  reaching  a  more  exact 
result. 

Example  2.  With  Interest  at  6  per  cent,  what  is  the 
balance  of  interest,  and  what  the  Cash  Balance,  July  1, 
of  the  following  account  with  E.  N.  Hartshorn  ? 

Ans.  Dr.  Bal.  of  Int.  $1.91 ;  Cash  Bal.  $101.91. 


Dr. 

E.  N. 

Hartshorn 

Or. 

Mar. 

4 

To  Mdse. 

240 

Apr. 
May 

6 

By  Cash 

400 

Apr. 

6 

"     do. 

180 

8 

"     do. 

250 

May 

8 

"     do. 

320 

June 

1 

"     do. 

200 

June 

Xi 

"     do. 

210 

126 


COMPLETE  BOOK-KEEPING. 


Time  Table : 

Exhibiting  the  time  in  months  or  days  from  any  day  in  one  month  to  the 
corresponding  day  in  any  other  month. 


To  «#■ 

Jan. 

Feb. 

lar. 

Apr. 

May 

Jane 

July 

Aag. 

Sep. 

Oct 

Nov. 

Dec. 

From 
January 

Months 
Days 

12 
365 

1 
31 

2 
59 

3 
90 

4 
120 

5 
151 

6 

181 

7 
212 

8 
243 

9 
273 

10 
304 

11 

334 

From 
February 

Months 
Days 

11 
334 

12 
365 

1 

28 

2 
59 

3 

89 

4 
120 

5 
150 

6 
181 

7 
212 

8 
242 

9 
273 

10 
303 

From 
Marcli 

Months 
Days 

10 
306 

11 
337 

12 
365 

1 
31 

2 
61 

3 

92 

4 
122 

6 
153 

6 
184 

7 
214 

8 
245 

9 

275 

From 
April 

Months 
Days 

9 

275 

10 
306 

11 
334 

12 
365 

1 

30 

2 
61 

3 
91 

4 
122 

5 
153 

6 
183 

7 
214 

8 
244 

From 
May 

Months 
Days 

8 
245 

9 

276 

10 
304 

11 
335 

12 
365 

1 
31 

2 
61 

3 
92 

4 
123 

5 

153 

6 

184 

7 
214 

From 
June 

Months 
Days 

7 
214 

8 
245 

9 

273 

10 
304 

11 
334 

12 
365 

11 
335 

1 
30 

12 
365 

2 
61 

1 
31 

3 
92 

2 
62 

4- 
122 

3 
92 

5 
153 

4 
123 

6 
183 

5 
153 

From 
July 

Months 
Days 

6 
184 

7 
215 

8 
243 

9 
274 

10 
304 

From 
August 

Months 
Days 

5 
153 

6 
184 

7 
212 

8 
243 

9 
273 

10 
304 

11 
334 

12 
365 

1 
31 

2 
61 

3 
92 

4 
122 

From 
September 

Months 
Days 

4 

122 

5 
153 

6 

181 

7 
212 

8 
242 

9 
273 

10 
303 

11 
334 

12 
365 

1 

30 

2 
61 

3 
91 

From 
October 

Months 
Days 

3 

92 

4 
123 

5 
151 

6 
182 

7 
212 

8 
243 

9 
273 

10 
304 

11 
335 

12 
3&'> 

1 
31 

2 
61 

From 
November 

Months 
Days 

2 
61 

3 
92 

4 
120 

5 
151 

6 
181 

7 
212 

8 
242 

9 
273 

10 
304 

11 
334 

12 
365 

1 
30 

From 
December 

Months 
Days 

1 
31 

2 
62 

3 
90 

4 
121 

5 
151 

6 
182 

212 

8 
243 

9 
274 

10 
304 

11 
335 

12 
365 

140.  To  find  the  time  between  two  dates  in  months,  or 
days,  look  for  the  month  from  which  you  reckon,  at  the 
left  of  the  table,  opposite  which,  and  under  the  name  of 
the  month  to  which  you  reckon,  will  be  the  number  of 
months  between  the  two  dates;  and  under  this,  in  the 
same  space,  the  number  of  days.  Thus :  From  April  1 
to  August  1  is  4  months,  or  122  days ;  from  November  10 
to  September  10  is  10  months,  or  304  days.  When  the 
day  of  the  month  to  which  you  reckon  is  greater  or  less 
than  that  from  which  you  reckon,  find  the  time  from  the 
earlier  date  to  the  same  day  in  the  month  of  the  later 


PRACTICAL  PROBLEMS.  127 

date,  and  add  or  subtract  the  difference  between  the  days 
of  the  month,  as  the  day  of  the  month  to  which  you 
reckon  is  later  or  earlier  than  the  day  from  which  you 
reckon.  Thus:  From  May  4  to  August  10  is  98  days; 
while  from  June  10  to  September  8  is  90  days.  In  case 
the  dates  between  which  you  reckon  time  embrace  the 
end  of  February,  in  leap  year,  another  day  must  be  added. 


PRACTICAL  PROBLEMS  FOR  SOLUTION. 

141.  The  author  has  many  times  been  called  upon 
for  assistance  by  business  men  who  would  give  detailed 
statements  of  their  affairs  but  were  unable  to  determine 
whether  they  had  gained  or  lost  in  business,  and  how 
much;  in  case  of  partnerships,  where  the  partners  agree 
in  all  material  facts  in  the  case,  but  can  not  tell  whether 
they  have  gained  or  lost  in  the  business,  or  the  value 
of  their  individual  or  joint  resources  therein;  where 
one  or  more  members  of  a  firrn  wish  to  sell  their  in- 
terest in  the  business  to  one  or  more  other  members, 
on  a  basis  agreed  upon ;  but  are  unable  to  determine 
the  value  to  be  conveyed,  etc.  Some  of  these  difficul- 
ties presenting  problems  arising  in  business  where  as- 
sistance has  been  called  for,  are  here  presented  for  solu- 
tion. 

142.  Various  obstacles  arise  in  the  solution  of  such 
problems.  Often  the  facts  presented  are  not  stated  in 
the  order  of  sequence  which  should  be  observed  in  their 
solution.  In  cases  where  a  cash  account  seems  desira- 
ble, items  are  wanting  which  renders  it  necessary  to 
dispense  with  it,  and  employ  some  other  title  of  account 
instead,  either  of  person  or  property,  in  order  to  reach 
the  result  sought.  To  meet  such  obstacles  satisfactorily, 
and  to  overcome  them  are  often  the  chief  troubles  in 
the  solution  of  problems  otherwise  simple. 


128  COMPLETE  BOOK-KEEPING, 

First  Problem. 

Submitted  by  a  Commission  House. 

John  Blake  &  Co.,  of  Detroit,  and  C.  K.  Dunham,  of 
Toledo,  agree  to  ship  butter  to  New  York  to  be  sold  on 
their  joint  account,  and  to  share  equally  in  gains  or 
losses  that  may  arise.  Blake  &  Co.  furnish  an  invoice 
of  butter  worth  $965.39,  which  they  ship  to  Dunham, 
who  pays  $5.79  railroad  charges,  and  expends  $100  in 
repacking.  He  then  ships  the  butter  to  McBride  &  Co., 
of  New  York,  who  sell  it  and  return  the  proceeds  to 
him,  amount  $1264.51.  Dunham  sells  the  barrels  con- 
taining the  butter  received  from  Blake  &  Co.  for  $6.25, 
collects  from  the  money  in  his  hands  a  balance  of  $87.69 
due  him  from  them  on  general  account,  and  remits  to 
them  drafts  amounting  to  $777.23. 

Required  to  determine: 

ht.  Whether  there  was  gain  or  loss  in  this  specula- 
tion, and  how  much. 

2d.  What  further  sum  (if  any)  Blake  &  Co.  are  en- 
titled to  receive  from  Dunham  to  close  the  account. 

Sd.  What  amount  of  Cash  (if  any)  Dunham  now 
holds. 

4th.  What  further  payment  and  entry  are  necessary  to 
settle  the  business. 

Second  Problem. 

Adams  and  Brooks. — Principal  and  Agent. 

John  Adams  purchases  a  stock  of  goods  for  which  he 
pays  $491.90,  and  engages  Ben  Brooks  to  conduct  the 
business  for  him,  for  which  Brooks  is  to  receive  one 
third  of  the  profits  for.  one  year.    During  the  year  Brooks 


PRACTICAL  PROBLEMS.  129 

receives  from  sales  $5127.79,  and  pays  for  goods  bought 
by  him  and  for  business  expenses,  S1886.72.  Brooks 
pays  to  Adams  of  receipts  from  sales  $2430.30.  Adams 
further  pays  for  goods  furnished  Brooks  S1143.48.  The 
goods  on  hand  at  the  end  of  the  year  are  inventoried 
at  $147.25,  and  delivered  to  Adams. 

Required  to  determine: 

1st.  Whether  they  have  made  or  lost  during  the  year, 
and  how  much. 

^d.  What  amount  of  Cash  (if  any)  Brooks  now  holds, 
and  to  whom  it  belongs. 

Sd.  What  payment  and  entry  will  close  the  books. 


Third  Problem. 

Brown  and  Smith. — Lumber  Business. 

Brown  and  Smith  engage  as  equal  partners  in  a  lumber 
business,  one  managing  the  business  and  the  other  fur- 
nishing the  capital.  Smith  furnishes  Brown  $1012.50  for 
use  in  business.  With  the  money  thus  furnished,  and 
Cash  receipts  from  sales,  Brown  buys  logs,  pays  for  saw- 
ing, piling  lumber,  cutting  lath,  hauling,  etc.,  from  time 
to  time,  the  sum  of  $7962.24,  and  receives  in  like  manner 
from  sales  the  sum  of  $6871.69.  For  sums  so  received 
and  paid,  Brown  renders  a  bill  of  items.  Smith  at  one 
time  collects  $75.25  of  lumber  money,  which  he  appro- 
priates to  his  own  use.  In  addition  to  these  receipts,  cer- 
tain sums  are  deposited  in  Bank.  During  the  progress 
of  the  business,  a  check  is  drawn  against  the  Lumber 
account  in  Bank,  in  favor  of  Smith,  for  $1500,  and  an- 
other, in  favor  of  Brown,  for  $858.54,  which  sums  they 
use  in  their  private  business.  These  transactions  cover- 
ing the  business,  the  books  are  closed. 

B.  K.-9. 


130  COMPLETE  BOOK-KEEPING. 

Required  to  determine: 

Ist.  Whether  they  have  made  or  lost,  and  how  much. 
£d.  Whether  Brown  owes  Smith,  or  Smith  Brown,  and 
how  much. 
Sd.  What  payment  and  entry  will  settle  the  business. 

Fourth  Problem. 

An  Association  employ  a  Druggist. 

A  co-operative  association  employ  a  druggist  at  a  salary 
of  $650  per  annum.  He  is  furnished  with  Drugs  in- 
voiced at  $1240.14,  and  $27.14  in  Cash.  He  is  to  collect 
his  pay  quarterly  from  the  receipts  from  sales.  During 
the  year  he  paid  at  different  times  for  Drugs  bought  for 
the  association  $1749.25,  and  received  from  sales  $4460.65. 
At  the  end  of  the  year  he  turned  over  to  the  association 
the  Drugs  remaining  on  hand,  invoiced  at  $1409.60,  and 
delivered  to  the  association  the  key  to  the  Cash  drawer, 
with  its  contents. 

Required  to  determine: 

1st.  Whether  the  association  gain  or  lose  by  employ- 
ing this  druggist,  and  how  much. 
2d.  Whether  the  gain  or  loss  is  in  Cash  or  Drugs. 
3d.  If  in  both,  how  much  in  each. 

Fifth  Problem. 

A  buySf  on  account ^  B^s  and  C«  interest  in  a  Note. 

A,  B,  and  C  are  equal  partners  in  business.  During 
the  absence  of  B  and  C  from  tlie  store,  A  makes  a  sale 
of  Mdse.  for  $1500,  and  receives  a  Note  in  payment. 
The  proper  entry  is  made  in  the  books  of  the  firm. 


PRACTICAL  PROBLEMS.  131 

When  B  and  C  return,  B  remarks  to  C  in  A's  hearing : 
''That's  a  bad  sale;  I'd  sell  my  interest  in  that  Note  at 
a  discount  of  25  per  cent,"  to  which  C  replies :  "  I'd  sell 
my  interest  in  it  at  a  discount  of  30  per  cent."  A  hear- 
ing these  criticisms,  remarks :  "If  that's  the  way  you  feel, 
gentlemen,  I'll  take  the  Note  on  the  terms  you  propose." 
They  both  reply:  "We  mean  business."  The  book- 
keeper is  directed  to  deliver  the  Note  to  A  and  make 
the  proper  entry  to  the  several  accounts  affected  by  the 
transaction. 

Required  to  determine: 
The  Journal  entry  for  this  transaction. 

Sixth  Problem. 

^  fecial  Partnership  settlement. — Brown,  Brooks  &  Co. 

Brown,  Brooks,  and  Chamberlain  engage  in  business, 
with  a  capital  of  $14000.  Brown  and  Brooks  each  invest 
S4000,  and  devote  their  time  to  the  business.  Brown 
receives  a  salary  of  $1000  per  annum.  On  account  of 
special  duties.  Brooks  receives  a  salary  of  $1200  per 
annum.  Chamberlain  invests  $6000,  but,  performing  no 
special  duties,  receives  no  salary.  The  capital  invested 
first  pays  to  the  partners  4  per  cent  for  its  use,  after 
which,  gains  and  losses  are  shared  in  proportion  to  in- 
vestments. Each  partner  is  at  liberty  to  withhold  or 
withdraw,  if  need  be,  not  to  exceed  SIOOO  of  his  invest- 
ment. But  on  any  sum  so  withheld  or  withdrawn,  he 
shall  allow  the  firm  interest  at  the  rate  of  5  per  cent 
per  annum.  Chamberlain  leaves  the  arrangement  of  the 
firm  name  to  Brown  and  Brooks,  each  of  whom  desires 
his  name  to  stand  first.  It  is  agreed  between  them  that 
he  who  will  allow  the  other  the  greatest  sum  for  this 
privilege  shall  enjoy  it.     The  choice  comes  to  Brown  by 


132  COMPLETE  BOOK-KEEPING. 

the  allowance  of  $200  therefor,  and  the  firm  name  be- 
comes Brown,  Brooks  &  Co.  Brown  actually  pays  in 
only  $3000,  and  Brooks,  at  the  expiration  of  six  months, 
withdraws  $1000.  The  gross  gain  of  the  business  for 
first  year,  exclusive  of  interest  on  investments  and  the 
salaries*  allowed  the  partners,  is  $5192.84,  and  the  ex- 
penses not  above  specified  are  $1163.35. 

Required  to  determine: 

Ist  The  net  gain  of  the  business. 

2d,  The  Balances  to  the  several  partners'  accounts. 


Seventh  Problem. 

Closing  a  Set  of  Books. — Trial  Balance  and  Inventory 
only  given. 

John  Young  engages  in  business  with  assets  amount- 
ing to  $60,500,  and  consisting  of  Cash,  Merchandise,  and 
Bills  Receivable.  His  liabilities  on  opening  his  books 
amount  to  $4500,  and  consist  of  Personal  accounts  and 
Bills  Payable.  During  a  year's  business,  he  has  bought 
Merchandise  from  time  to  time,  in  the  aggregate  amount- 
ino'  to  over  $40,000.  He  has  also  invested  in  Real  Estate. 
Some  of  his  Invoices  of  Mdse.  were  paid  in  Cash,  and 
others  were  paid  by  Note,  while  still  others  were  bought 
on  account.  Sales  of  Mdse.  amounting  to  over  $50,000 
have  been  made  from  time  to  time,  and  many  accounts 
of  the  Ledger  have  been  closed.  On  taking  an  account 
of  stock  at  the  end  of  the  year,  the  Merchandise  on  hand 
per  Inventory  amounts  to  $18,420,  and  the  following  is 
a  summary  of  the  Trial  Balance. 

Note. — Simple  int'estment  In  property,  often  dealt  in  for  gain,  does 
not  constitute  tl)c  account  speculative.  Tlic  Real  Estate  investment 
in  this  problem  may  be  considered  as  worth  its  cost. 


PRACTICAL  PROBLEMS. 


133 


Dr. 


Trial  Balance. 


Or. 


Personal  Accounts 
Bills  Rec. 
National  Bank 
Real  Estate 
Cash 
Expense 

660 

12160 

6190 

3400g 

1450 

4460 

58920 

Stock 

Interest 

Personal  Accounts 

Bills  Payable 

Profit  &  Loss 

Merchandise 

56000 

300 

500 

1020 

•640 

460 

58920 

" 

Required  to  determine: 

1st.  Whether  there  has  been  gain  or  loss  in  the  busi- 
ness, and  how  much. 

2d.  The  amount  of  Young's  Assets  on  closing,  and  in 
what  they  consist. 

Sd.  The  amount  of  his  Liabilities,  and  in  what  they 
consist. 


Eighth  Problem. 

Partnership. —  The  Capital  of  Young  managed  by  his 
partner. 

On  closing  the  business  of  the  Seventh  Problem  as 
above,  John  Young  enters  into  a  co-partnership  with 
Hiram  Smith,  and  they  conduct  a  Dry  Goods  and  Real 
Estate  business  under  the  firm  name  of  "Young  and 
Smith."  Young  furnishes  the  capital,  consisting  of  the 
Merchandise  and  Real  Estate  on  hand  at  the  close  of 
the  last  problem  and  $7580  of  Cash,  for  the  use  of  which 
he  is  to  receive  4J  per  cent.  Smith  furnishes  no  capital, 
but  devotes  his  time  to  the  business,  for  which  he  is  to 
receive  a  salary  of  $1600  a  year.  After  paying  for  the 
use  of  the  capital  invested,  the  salary  of  the  active  part- 
ner, and  all  expenses  incurred  in  conducting  the  busi- 
ness, four  sevenths  of  the  net  gain  is  to  go  to  Young 
and  three  sevenths  to  Smith.     At  the  close  of  the  year's 


134 


COMPLETE  BOOK-KEEPING. 


business,  and  before  making  entries  for  the  use  of  capital 
and  for  salary,  they  have  on  hand  Merchandise  worth 
$25,600,  and  Real  Estate  worth  $45,000,  per  Inventory, 
with  the  following  Trial  Balance. 


Dr. 


Trial  Balance. 


Or. 


Merchandise 

Bills  Rec. 

National  Bank 

Cash 

Profit  &  Loss 

Expense 

22500 

26260 

5750 

750 

2440 

4000 

ytock 
Interest 
Real  Estate 

60000 

450 

1250 

61700 

61700 

1 

Required  to  determine: 

1st.  The  7iet  gain  of  this  business  for  the  year. 

2d.  The  balance  to  Young's  account. 

Sd.  The  balance  to  Smith's  account. 

4th.  The  amount  of  Resources,  and  in  what  they  consist. 

5th.  The  amt.  of  Liabilities,  and  in  what  they  consist. 

6th.  The  value  of  net  Stock  and  to  whom  it  belongs. 


JOINT  STOCK   COMPANIES. 

143.  A  partnership  is  an  association  of  two  or  more 
persons  for  the  purpose  of  transacting  business,  with 
their  united  ability  and  means,  as  one  party,  with  an 
agreement  to  share  the  profits  arising  therefrom  on 
some  established  basis. 

Note  1.— Such  a  partnership,  called  also  a  firm  or  company,  can  be 
changed  only  by  the  agreement  of  all  the  persons  composing  it,  and  is 
terminated  by  the  expiration  of  tbe  time  for  which  it  was  made,  or  by 
the  death  of  any  one  of  its  members. 

Note  2.— A  partner  may  sell  his  interest  in  the  common  property 
of  a  firm,  but  the  person  buying  can  become  a  partner  in  his  place 
only  by  the  consent  of  the  other  partners. 


JOINT  STOCK  COMPANIES.  135 

144.  A  Joint  Stock  Company  is  a  species  of  partner- 
ship, consisting  generally  of  a  large  number  of  persons, 
with  a  capital  made  up  of  shares  whose  owners  may- 
transfer  the  stock  to  others  without  consulting  the  co- 
partners. 

Note. — The  stockholders  of  such  companies  may  make  assignment, 
buy  more  stock,  or  sell  what  they  have.  The  interests  of  members 
may  tlius  change,  and  the  members  themselves,  but  the  company  con- 
tinues, and  may  be  perpetual,  unless  limited  by  its  charter  or  termi- 
nated for  cause. 

145.  It  many  times  seems  desirable  to  conduct  a  busi- 
ness requiring  more  means  than  any  one  person,  or  any 
small  number  of  persons  interested,  have  at  their  dis- 
posal. In  such  cases,  enterprises  of  importance  to  a 
whMe  community  can  be  wisely  inaugurated  and  suc- 
cessfully carried  on  only  by  combining  the  capital  and 
the  practical  skill  of  a  considerable  number  of  persons. 
It  is  under  such  circumstances  that  Joint  Stock  Com- 
panies become  a  necessity,  and  meet  the  emergency  by 
providing  the  means  requisite  to  success. 

146.  Persons  organizing  a  Joint  Stock  Company,  or 
purchasing  shares  of  its  stock  after  organization,  do  so 
with  the  knowledge  that  their  investments  are  devoted 
to  the  purpose  for  which  the  company  is  organized. 
Stockholders  have  equal  rights  in  the  election  of  offi- 
cers in  proportion  to  the  number  of  shares  ot  stock 
they  severally  own,  and  a  right  to  their  share  of  the 
profits  of  the  company  derived  from  the  prosecution  of 
its  business;  but  they  have  no  claim  on  the  company 
for  a  return  to  them  of  their  investments. 

147.  With  the  company  organized,  and  at  their  annual 
meetings  thereafter,  the  stockholders  of  a  Joint  Stock 
Company  choose  trustees  or  directors,  who  are  intrusted 
with  the  management  of  the  company's  affairs,  and  who 
appoint  persons  to  conduct  its  business  under  their  di- 
rection. 


136 


COMPLETE  BOOK-KEEPING. 


Note  1. — The  transactions  of  Joint  Stock  Companies  and  the  books 
required  for  their  current  business  are  the  same  as  in  the  case  of  indi- 
viduals and  firms. 

Note  2. — The  chief  difference  between  them  consists  in  the  organi- 
zation of  such  companies,  the  purchase  and  sale  of  certificates  of  stock 
by  which  its  actual  owners  are  changed,  and  the  manner  of  conducting 
their  annual  elections.  These  distinctive  features  will  now  be  briefly 
considered. 

148.  At  a  meeting  called  for  that  purpose,  let  us  sup- 
pose it  is  decided  to  organize  a  manufacturing  company, 
with  a  capital  of  S60,000,  that  a  paper  is  presented  for 
subscriptions  to  capital  stock  in  $100  shares,  and  that 
the  requisite  six  hundred  shares  are  subscribed  by  ten 
persons,  at  a  meeting  held  November  10th,  as  follows : 


Subscriptions  to  the  Home  Manufactueing  Company. 


Number  of  Shares  Subscribed. 

Amount 

Siffnatures  and  Seals. 

Ninety 

90 

9000 

John  King 

L.  s.; 

Ninety 

90 

9000 

Henry  Brown 

L.  s/ 

Seventy-five 

75 

7500 

George  Curtis 

L.  S.| 

Sixty 

60 

6000 

Jay  Howard 

L.  s.; 

Forty-five 

45 

4500 

Mary  Brooks 

L.  S. 

Sixty 

60 

6000 

Otis  Wood 

L.  8.; 

L.  s/ 

Sixty 

60 

6000 

Hiram  Evans 

Forty-five 

45 

4500 

Eliza  Smith 

L.  8.; 

Forty-five 

45 

4500 

Isaac  Sands 

L.  S. 

Thirty 

30 
600 

3000 
60000  " 

John  Sutton 

L.  S.' 

149.  After  these  subscriptions  have  been  made,  John 
King  is  chosen  President ;  George  Curtis,  Secretary ;  and 
Hiram  Evans,  Treasurer.  These  officers  are  instructed 
to  provide  such  books  and  stationery  as  will  be  required 
in  perfecting  thoir  organization.  The  Treasurer  is  in- 
structed to  collect  10  per  cent  of  the  Stock  subscribed, 
as  here  shown,  and  to  issue  Installment  Scrip  therefor, 
to  be  signed  by  himself  and  the  President,  when  they 
adjourn  to  meet  again  in  one  week. 

m 


JOINT  STOCK  COMPANIES.  137 

Note. — These  proceedings  should  be  recorded  in  a  Book  of  Minutes 
kept  by  the  Secretary,  and  attested  by  his  signature. 

150.  At  the  meeting  of  November  17th,  the  officers 
report  that  they  have  procured  the  following  books  for 
the  use  of  the  company :  Book  of  Minutes,  Installment 
Book,  Capital  Stock  Journal  and  Ledger,  and  Certificate 
Book.  Sample  pages  of  most  of  these  are  here  intro- 
duced, showing  their  form  and  use.  The  Treasurer  has 
collected  from  the  subscribers  to  Capital  Stock  the  first 
Installment  of  10  per  cent.  Nos.  2  and  6  of  Installment 
Scrip  issued  are  shown  on  the  following  pages. 

Note  1. — The  Capital  Stock  Ledger  shows  the  credits  to  which  sub- 
scribers become  entitled  from  time  to  time,  based  upon  their  payments 
of  assessments,  as  shown  by  the  Installment  Scrip  Book. 

Note  2. — Enough  of  both  of  these  books  is  shown  to  illustrate  their 
use.  The  same  is  true  of  the  Certificate  Book,  used  also  as  a  Transfer 
Book. 

151.  A  second  Installment  of  40  per  cent  is  collected 
Nov.  26th,  for  which  Installment  Scrip  is  issued  similar 
to  that  shown  on  next  page,  and  credit  is  given  to  the 
subscribers,  as  shown  in  the  Stock  Ledger.  A  third 
Installment  of  50  per  cent  is  collected  Dec.  20th,  for 
which  credit  is  given  in  the  Stock  Ledger.  The  Stock 
being  now  all  paid  in.  Certificates  of  Stock  are  issued  to 
subscribers,  samples  of  which  appear  in  the  Certificate 
Book.  The  proper  entries  are  also  made  in  the  Stock 
Ledger,  as  shown. 

Note  1. — When  subscriptions  to  Joint  Stock  Companies  are  paid 
at  the  time  they  are  made,  or  all  at  once,  the  Installment  Book  may 
be  dispensed  with. 

Note  2. — These  Stock  Certificates  are  transferable  only  on  the  sur- 
render of  certificates  held  by  sellers,  at  the  office  of  the  Company  for 
cancellation,  and  the  issue  of  new  certificates  to  parties  entitled  to 
them.  Sales  of  stock  can  not  be  considered  as  completed  until  new 
certificates  are  issued  and  entered  upon  the  books  of  the  Company. 
The  Stock  Ledger  thus  at  all  times  shows  the  owners  of  Stock,  and 
the  number  of  shares  held  by  each  stockholder. 


138 


COMPLETE  BOOK-KEEPING. 


INSTALLMIEJNX    SCRIF    BOOK. 


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JOINT  STOCK  COMPANIES. 


139 


INSTALLiytENT    SCRIF    BOOK. 


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140 


COMPLETE  BOOK-KEEPING. 


CERTIFICATE    J^NT>   TRANSFER   BOOK. 


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JOINT  STOCK  COMPANIES. 


141 


CERTIFICATE   AND   TR  AI^  SFER   HOOK. 


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142 


COMPLETE  BOOK-KEEPING. 


Dr. 


CAMTAIL.   STOCK   LEIDGrER. 

John  King 


1884.  I 

Nov.  j  15  90 Shares,  istinstrt 

'♦       26  90  Shares,  2d  insfit  I 


Dec. 


90  Shares,  3d  inst'i't 
Certificate  No.  1 


Cr. 


900 
3600 
4500 

9000 


Dr. 


Heney  Brown 


1881.  |»     ! 

Nov.  1 15 1 90  Shares,  i«tinsfrt  i 

"       26  90  Shares,  2d  instTt : 

Dec.    20  90  Shares.  3d  InstTt  I 

"       20  Certificate  No.  2 
1886. 
Jan.     8  do.        "    11 


Or. 


1 

9001 

3600 

4500l 

] 

9000 

2000 

Dr. 


Otis  Wood 


Jan.    $ 


Certificate  No.  6 


,16000 


188«.         I 

Nov.  1 17  60 Shares,  istinstTt 

"       26  60  Shares,  2d  InstTt 

Dec.  1  20 1 60  Shares.  3d  inst  ri 

20  Certificate  No.  6 


Jan. 


do. 


O. 


h  600 
2400 
30001 


4000 


152.  The  Transfer  Book  is  a  book  for  registering  trans- 
fers of  Stock  Certificates  in  case  of  the  sale  of  Stock, 
and  may  be  combined  with  a  Certificate  Book.  As  only 
stockholders  can  have  occasion  to  ask  for  a  transfer,  a 
blank  form  may  be  printed  on  the  back  of  certificates 
for  use  as  required,  in  the  following  words,  or  others  of 
like  import: 

For  value  received  /  hereby  assign  and  transfer  to 
Henry  Brown,  Twenty  shares  of  the  within  Stock,  and 


JOINT  STOCK  COMPANIES.  143 

authorize  and  request  the  Secretary  to  make  the  neces- 
sary transfer  on  the  books  of  the  company. 

Witness  my  hand  and  seal  this  eighth  day  of  January , 
1885.  (Signed)        Otis  Wood.     [l.  s.] 

Note  1.— Here  Otis  Wood  sells  to  Henry  Brown  twenty  of  the 
Shares  of  Stock  standing  in  his  name,  as  shown  in  Certificate  No.  6, 
fills  the  blank  on  the  back  of  said  Certificate,  as  above  shown,  and  for- 
wards the  same  to  the  Secretary,  when  the  lower  part  of  the  stub  is 
filled  as  shown  in  Certificate  Book,  and  an  entry  made  in  the  Transfer 
Journal,  for  convenience  of  reference  and  posting,  as  follows : 

No.  6,  Otis  Wood,  Dr.  60  shares. 

To  No.  11,  Henry  Brown,  20  shares. 

"    No.  12,  Otis  Wood,  40  shares. 

Note  2. — This  entry  shows  one  certificate  canceled,  and  two  issued 
in  its  stead,  together  making  the  same  amount.  No.  6  is  posted  to  the 
Dr.  and  No.  12  to  the  Cr.  of  Wood's  account,  and  No.  11  to  the  Cr.  of 
Brown's  account,  as  shown  in  the  Stock  Ledger. 

Note  .3. — Entering  all  transfers  in  like  manner,  the  Cr.  side  of  the 
Stock  Ledger  will  at  all  times  show  the  No.  and  amount  of  Certificates 
issued;  and  the  Dr.  side,the  No.  and  amount  of  Certificates  canceled, 
and  the  Cr.  balance  to  any  stockholder's  account  will  show  the  amount 
standing  in  his  name. 

153.  The  foregoing,  from  Art.  143,  relates  exclusively 
to  the  Stock  Books,  which  are  entirely  separate  from  the 
books  recording  the  transaction  of  the  business  of  the 
company.  As  money  or  property  are  realized  from  the 
payment  of  installments  on  subscriptions,  or  from  the 
sale  of  Certificates,  the  Operating  Books  of  the  business 
may  be  opened  as  in  other  cases,  making  Cash  and  prop- 
erty held,  Dr.  to  Capital  Stock,  employing  such  number 
and  variety  of  books  for  recording  transactions  as  the 
business  shall  require,  as  in  general  book-keeping. 

154.  When  a  Joint  Stock  Company  would  make  a 
dividend  to  stockholders,  all  speculative  accounts  are 
properly  closed  into  Profit  and  Loss,  as  in  other  cases, 
in  order  to  ascertain  what  has  been  made  in  the  busi- 
ness.    It  may  then  be  thought  best  to  set  aside  a  por- 


144  COMPLETE  BOOK-KEEPING. 

tion  of  tlie  earnings  of  the  business  to  meet  possible 
reverses,  or  for  improvements  that  may  seem  desirable, 
and  to  divide  among  stockholders  what  remains  of  the 
net  gain  to  a  given  date. 

Note  1. — Suppose  the  Profit  and  Loss  account  shows  that  our  Com- 
pany has  made  $4500,  and  the  directors  decide  to  make  a  dividend 
of  5  per  cent  to  stockholders,  setting  aside  a  reserve  of  $1500.  The 
proper  entry  in  the  books  to  show  this  action  is: 


and  Loss 

Dr.                         $4500 

To  Reserve 

$1500 

"   Dividend 

3000 

Note  2. — With  a  Bank  account  exceeding  the  Dividend  account 
provided  for,  the  dividend  may  be  made  thus:  Make  an  alphabetical 
list  of  stockholders  from  the  Stock  Ledger,  showing  the  amount  of 
Stock  standing  to  the  Cr.  of  each.  In  a  special  Check  Book,  "  for  the 
payment  of  Stock  dividends,"  fill  Checks  to  the  order  of  the  several 
stockholders,  for  the  amount  of  dividend  due  them,  when  this  Journal 
entry  may  be  made : 

Dividend  Dr.  $3000 

To  Bank  $3000 

The  posting  of  this  entry,  and  the  delivery  of  the  Checks  to  the  parties 
entitled  to  them,  completes  the  payment  of  the  dividend. 

Note  3.— Printed  notices  may  be  sent  to  the  Stockholders,  inform- 
ing each  of  the  dividend  made,  and  of  the  amount  due  him,  which 
will  be  paid  on  application,  or  held  subject  to  his  order;  or  checks 
may  be  sent  with  the  notification  that  a  dividend  has  been  so  made. 

Note  4. — When  Checks  showing  on  their  face  that  they  are  used 
"for  the  payment  of  Stock  dividends"  (Note  2)  are  on  their  return 
from  the  bank  filed  together  and  preserved,  they  become  vouchers 
for  the  payment  of  such  dividends. 

Note  6. — Some  prefer  opening  an  account  with  each  stockholder 
to  the  method  shown  in  Note  2.  After  the  entry  in  Note  1  has  been 
made  they  would  say : 

Dividend  Dr.  $3000 

To  Stockholders  (severally), 

giving  each  credit  for  the  amount  due  him,  and  then  make  the  Stock- 
holders Dr.  (.severally)  to  the  Bank  as  Checks  are  paid  them.  Where 
the  dividends  of  Stockholders  are  for  any  cause  left  with  the  Com- 
pany, this  method  enables  the  secretary  (or  book-keeper)  at  any  time 
more  reatlily  to  determine  the  condition  of  any  stockholder's  account. 


JOINT  STOCK  COMPANIES.  145 

Note  6. — In  case  of  the  transfer  of  Stock,  the  Certificates  bearing 
the  request  and  returned  for  cancellation,  authorize  the  entry  in  the 
Transfer  Journal  shown  in  Art.  152,  Note  1.  But  these  Certificates 
should  be  preserved  for  reference,  when  necessary,  to  show  authority 
for  the  transfer.  This  may  be  done  by  placing  them 'on  file,  or  by 
pasting  them  to  the  stubs  of  the  Certificate  Book  from  which  they 
were  taken. 

155.  In  elections  stockholders  are  entitled  to  cast  one 
vote  for  every  share  of  stock  they  hold,  whether  in  their 
own  right  or  by  proxy.  There  may  be  as  many  votes 
cast  at  an  election  as  the  Company  has  shares  of  stock, 
and  no  more. 

Note. — In  case  a  company  of  four  hundred  stockholders  should 
together  hold  one  thousand  shares,  three  of  them  holding  one  hun- 
dred and  seventy-five  shares  each,  could  by  united  action  control  an 
election ;  for  their  three  votes  represent  525  shares  of  stock,  while  the 
votes  of  the  other  three  hundred  and  ninety-seven  stockholders  would 
represent  only  475  shares ;  and  so  in  other  cases. 

156.  Suppose  this  Company  conducts  the  business  one 
year  (more  or  less),  and  the  Board  of  Directors  declare  a 
dividend  to  the  stockholders  of  a  portion  of  the  Com- 
pany's earnings  to  date.  On  closing  their  books  in  the 
usual  way,  the  Profit  and  Loss  account  shows  a  net  gain 
of  $4950,  and  the  Company  has  $3500  to  its  credit  in 
Bank.  The  Directors  decide  to  make  a  dividend  of  4  per 
cent  upon  their  Capital  Stock,  and  enter  the  excess  of 
profits  to  the  Reserve  account.  Each  of  the  original 
stockholders  retains  the  Stock  taken  on  the  organization 
of  the  company,  except  the  changes  shown  in  the  Stock 
Ledger. 

Required  to  determine: 

1st.  An  alphabetical  list  of  stockholders,  with  the  num- 
ber of  shares  standing  to  the  credit  of  each. 

2d.  The  dividend  to  which  each  stockholder  is  entitled, 
and  the  amount  of  the  whole. 

3d.  The  condition  of  the  Profit  and  Loss  account  after 
the  dividend  declared  is  made. 

B.  K.-IO. 


146  COMPLETE  BOOK-KEEPING. 

4th.  The  condition  of  the  Reserve  account. 

5th.  The  balance  remaining  in  Bank  after  checks  in 
payment  of  dividends  have  been  made  and  delivered  to 
stockholders. 


SPECIAL  COLUMNS  AND  BOOKS. 

157.  Special  Columns  are  columns  additional  to  those 
usually  employed  in  keeping  accounts,  introduced  for 
convenience  in  particular  cases,  and  generally  for  saving 
time,  space,  or  work.  Their  number  and  use  will  depend 
upon  the  nature  of  one's  business  ah4  the  particulars  he 
wishes  to  record. 

Note  1. — In  tlie  Cash  Book,  at  pages  102  and  103,  special  colunnis 
are  introduced  for  Merchandise,  both  Dr.  and  Cr.  Their  use  saves 
time  and  space  in  posting,  as  shown  in  Art.  116  and  Notes. 

Note  2. — In  a  Journal  for  a  Retail  Business,  a  special  column  for 
Mdse.  Or.  may  be  introduced  to  advantage,  thus  constituting  a  three- 
column  Journal,  which  is  a  favorite  form  with  many  merchants  and 
accountants. 

Note  3. — In  case  items  of  Expense  often  occur,  a  special  column 
for  Expense  Dr.  may  be  added,  making  a  four-cobimn  Journal.  In  like 
manner  columns  may  be  added  for  any  purpose,  Dr.  or  Cr.,  or  both. 

Note  4.— By  introducing  additional  Dr.  and  Cr.  columns  for  Cash, 
a  six-column  Journal  is  provided.  Then  by  posting  the  footings  of  the 
Cash  columns  the  Ledger  i«  made  to  contain  a  condensed  Cash  Ac- 
count, which  some  prefer. 

158.  The  Purpose  in  employing  special  columns  in 
Journalizing  is  to  save  work  in  posting,  and  to  accom- 
modate Ledger  Accounts  in  less  space.  The  use  of  spe- 
cial columns  involves  no  new  principle;  and  they  can 
be  properly  employed  only  when  they  may  be  made  to 
serve  one  or  both  of  the  purposes  named. 

159.  Special  Books  may  be  employed  to  advantage  in 
many  (;ascs,  as  books  of  original  entry,  and  auxiliary  to 
the  Day  Book  or  Journal.     The  consideration  of  some  of 


SPECIAL  COLUMNS  AND  BOOKS.  147 

these,  in  connection  with  tlieir  particular  uses,  may  aid 
the  learner  in  originating  others,  as  he  may  have  occa- 
sion for  their  employment  in  business. 

160.  A  Time  Book  is  especially  useful  in  large  mechan- 
ical and  manufacturing  establishments  in  which  many 
persons  are  employed.  In  it  are  entered  the  names  of 
workmen,  their  department  of  work,  time  employed,  rate 
of  daily  wages,  the  amount  of  wages  for  the  month,  and 
the  total  amount  of  Pay  Roll  for  this  time.  The  form 
on  the  next  folio  is  convenient  for  a  daily  register. 

Note  1. — With  a  Time  Book  kept  as  there  indicated,  one  entry  per 
month  in  the  Cash  Book  is  sufficient  fot  the  paj^ment  of  all  the  work- 
men, whether  only  4,  as  there,  or  400.  The  entry  for  this  Pay  Roll,  on 
the  Cr,  side  of  the  Cash  Book,  would  be,  under  date  of  payment: 

By  Pay  Roll  $159.56 

Note  2. — In  case  of  checking  from  Bank  the  sum  required  for  the 
payment  of  a  month's  wages,  one  Journal  entry  would  suffice  for  the 
record,  as  follows : 

Pay  Roll  Dr.  $159.56 

To  Bank  $159.56 

The  entries  here  shown  contemplate  monthly  payments.  In  case 
payments  are  not  so  made,  personal  accounts  with  employes  become 
necessary. 

Note  3. — Although  receipts  should  generally  be  taken  when  mon- 
eys are  paid,  in  case  of  employing  a  large  number  of  hands  this  is  not 
now  generally  done,  and  is  in  many  cases  impracticable.  But  entries 
like  the  above,  agreeing  in  amount  with  the  footings  of  the  Pay  Roll, 
are  evidence  of  payment. 

Note  4. — With  many  hands  employed  in  different  branches  of  labor, 
as  supervision,  molding,  finishing,  etc.,  if  desirable  to  keep  an  account 
of  the  cost  of  each  separate  branch  or  department  of  the  business,  it 
can  readily  be  done  by  classifying  the  Pay  Roll,  entering  the  names  of 
persons  engaged  in  each  separate  department  together,  and  full  ex- 
tending each  class  by  itself.  In  either  case,  however,  the  Pay  Roll 
would  really  be  but  a  branch  of  the  Expense  Account. 

Note  5. — The  Time  Book,  kept  as  here  indicated,  is  at  once  a  Pay 
Roll  and  a  book  of  original  entry,  and,  as  such,  should  be  preserved  as 
an  essential  part  of  the  records  of  one's  business. 


148 


COMPLETE  BOOK-KEEPING. 


Pay  Boll  of  Bkown,  Smith  &  Co., 


Names. 

Work. 

1 

16 

2 

17 

3 

18 

4 
19 

5 
20 

6 

21 

7 
22 

8 
23 

Jas.  Smith 

Foreman 

/ 

/ 

0.  Brown 

Fireman 

/ 

/ 

/ 

M.  Hall 

Porter 

K 

/ 

Wm.  Fox 

Laborer 

:^ 

/ 

/ 

/ 

161.  A  Physician's  Diary,  of  sufficient  size  for  record- 
ing daily  visits  to  his  patients,  may  be  so  arranged  as  to 
be  convenient  for  the  pocket,  a  reliable  book  of  original 
entry,  and  an  important  auxiliary  to  a  complete  set  of 
account  books  for  his  entire  business.  The  following 
form  admits  of  entering  the  names  of  the  parties  with 
whom  accounts  are  kept,  the  amount  of  charge  and  of 
payment,  and  any  remarks  that  may  be  deemed  desira- 
ble, and  shows  the  member  of  family  visited,  with  the 
number  of  visits  and  the  days  of  making  them,  for  one 
week,  without  rewriting  names : 


Daily  Record  For  Week  Ending  Dec.  20th,  1884. 

Accounts. 

Amt.    Paid.        Remarks. 

8a. 

M. 

Tu. 

w. 

Th. 

P. 

Sat. 

H.  Brown 

1<J»,         7 

29  Fort  Street 

V. 

V.T. 

V.P. 

V. 

V. 

P. 

V. 

Typhoid  fever 

2. 

4. 

3. 

2. 

2. 

1. 

2. 

0.  Brooks 

i   1 

7  76 

aw  Caw  Ave. 
lltMles 

Alie* 

2 

p. 
I. 

2. 

V. 

2. 

M. 

.75 

J.  Smith 

8176 

8 

1  Fwiner,  HoWen  RA 
76l  Injured  left  hip 

V. 

5.      ,2. 

P.M. 
I. 

M. 

.75 

T.  White 

« 

]  801  Main  Ktr.«t 
Hooping  cough 

V.  1 

J- 

V. 

V. 

2. 

JO 

50 

J5  75                         , 

! 

1 

SPECIAL  COLUMNS  AND  BOOKS. 


149 


For  the  Month  of 

December,  1884. 

9 
24 

lO 
25 

11 
26 

27 

13 
28 

14 
29 

16 
30 

31 

1 
Time. 

Bate. 

Amount. 

Total. 

/ 

/ 

/ 

/ 

/ 

/ 

27 

2 

54 

/ 

/ 

/ 

/ 

/ 

/ 

/ 

/ 

/ 

/ 

/ 

/ 

/ 

?7 

1 

75 

47 

?5 

/ 

/ 

/ 

/ 

/ 

/ 

/ 

/ 
/ 

/ 
/ 

/ 

/ 

/ 

14 

/ 

/ 
/ 

/ 

25 

5 

1 

25 

50 

/ 

/ 

/ 
/ 

/ 
/ 

/ 

/ 

/ 

/ 

/ 
/ 

K 

26 

25 

1 

25 

32 

81 

159  56 

The  Journal  entry,  for  the  record  in  the  Diary  here 


exhibited,  will  be  as  follows : 


H.  Brown 
O.  Brooks 
J.  Smith 
T.  White 


Dr. 


16. 
7.75 
8.75 
8. 


To  Prof.  Services 


40.50 


The  entry  in  the  Cash  Book  for  the  payments  here 
entered  will  be  on  the  Dr.  side,  as  follows : 

To  H.  Brown  7. 

"    J.  Smith  8.75 

Note  1. — These  entries,  posted  to  the  Ledger,  will  give  a  complete 
record  of  the  work  entered  in  the  Diary.  Professional  Services  will 
have  credit  for  services  rendered.  Each  party  served  will  be  Dr.  for 
the  service  rendered  him,  and  Cr.  for  payments  made.  The  account 
with  Smith  will  be  closed.  Other  transactions  between  a  Physician 
and  his  patients  would  be  recorded  as  in  ordinary  business. 

Note  2. — By  using  a  visiting  list  occupying  a  folio  for  what  is  here 
shown  (there  are  a  variety  of  similar  ones  in  the  market),  a  Physician 
may  with  little  additional  labor  keep  a  very  complete  set  of  accounts. 
But  one  Journal  and  Cash  Book  entry  would  be  required  for  the  visits 
of  a  week,  or  the  record  of  a  folio  of  the  Diary,  however  long  its  range 
of  time.  Some  of  these  Diaries  give  a  week,  some  ten  day.s,  and  others 
a  month,  to  a  folio. 

Note  3. — A  Journal  might  be  dispensed  with,  and  posting  be  done 
directly  from  the  visiting  list.    This  would  require  an  additional  col- 


150  COMPLETE  BOOK-KEEPING. 

umn  at  the  left  for  Ledger  folio.    The  footings  of  "Amount"  and 
"Paid"  would  be  posted  to  Professional  Services  and  to  Cash. 

Note  4. — Most  Diaries  suggest  abbreviations  that  might  suitably  be 
employed;  as,  V.  for  visit;  P.,  prescription;  M.,  medicine;  and  so 
on.  The  amount  of  the  charge  would  usually  indicate  the  nature  of 
the  service  rendered,  so  the  name  of  the  patient  (when  not  the  one  in 
whose  name  the  account  was  kept)  might  be  entered,  as  in  case  of 
0.  Brooks  in  the  Record  here  shown. 

162.  Farm  Accounts  may  be  kept  in  simple  Ledger 
Accounts,  as  with  persons  or  Cash,  by  making  the  Farm, 
or  any  portion  of  it  with  which  an  account  is  kept,  Dr. 
for  Avhat  it  costs,  and  Cr.  for  what  it  produces.  The 
excess  of  the  Cr.  side  of  any  such  account  over  its  Dr. 
side,  will  be  net  gain  for  the  time.  In  case  the  Dr.  side 
of  the  account  exceeds  the  Cr.  side,  the  difference  will 
represent  net  loss. 

Note  1. — Accounts  may  be  thus  kept  with  one  or  any  number  of 
fields,  or  departments  of  farm  work,  for  a  single  crop  or  for  one  year, 
as  with  a  Corn-field,  a  Wheat-field,  a  Sheep  and  Wool  Account,  etc. 
Each  such  account  would  show  its  gain  or  loss. 

Note  2. — With  but  little  more  work  a  regular  set  of  double-entry 
books  may  be  kept,  including  all  such  accounts  as  one  may  have  occa- 
sion to  employ.  These  books  may  be  opened  and  kept  as  in  a  mercan- 
tile or  general  business.  The  several  farm  accounts  kept,  in  such  cases, 
will  be  speculative,  and,  in  closing  the  books,  should  be  treated  like 
such  accounts  in  any  other  business. 

163.  A  Farm  Record,  furnishing  a  full  and  complete 
record  of  one's  farming  operations,  including  the  cost 
of  labor  employed  in  preparing  fields  for  crops ;  the  cost 
of  seed,  and  of  planting  or  sowing;  the  cost  of  protect- 
ing and  cultivating  growing  crops,  and  of  harvesting 
them;  the  price  they  bring  when  sold,  or  their  worth 
as  used ;  the  kind,  quantity,  and  cost  of  fertilizers  em- 
ployed ;  the  effect  of  rotation  of  crops,  etc.,  etc.,  would 
be  of  great  value  in  enabling  farmers  to  profit  most 
largely  by  their  individual  or  joint  experience.  But 
this  involves  more  labor  than  the  average  farmer  has 
hitherto  cared  to  undertake. 


FiPECTAL   COLUMNS  AND  BOOKS.  151 

164.  The  Profits  arising  from  raising  different  crops, 
and  from  difl'crent  methods  of  cultivating  the  same 
crop,  greatly  vary;  but  to  what  extent,  comparatively 
few  farmers  know,  though  the  knowledge  might  be  of 
great  value  to  them.  A  systematic  record,  not  requiring 
great  labor,  will  furnish  them  the  means  of  determining 
the  cost  and  production  of  different  crops  or  branches 
of  farming,  and  the  profit  or  loss  thence  arising,  with 
an  approximate  accuracy  that  will  be  of  service  in  ena- 
bling them  to  decide  when  wisely  to  extend  certain 
operations,  and  when  discreetly  to  curtail  others. 

165.  A  Farm  Register,  for  labor  performed,  may  be 
kept  on  the  general  plan  of  the  Time  Book  already 
shown,  but  in  a  larger  book,  to  accommodate  the  days 
of  the  month  in  once  crossing  the  folio,  by  using  the  left 
column  for  the  titles  of  speculative  accounts,  or  branches 
of  farming,  as  Wheat-field,  Orchard,  Live  Stock,  Dairy, 
etc.,  and  entering  regularly  the  number  of  days'  work 
expended  upon  each  such  branch.  Two  lines  might  be 
used  for  each  title — say  the  upper  for  day's  work  of  men, 
and  the  lower  for  team — which  would  be  at  different 
rates,  and  the  amount  of  the  whole  extended  at  the 
right,  when  one  Journal  entry  for  a  folio  may  cover  the 
cost  for  labor  and  team  on  all  such  accounts,  by  mak- 
ing each  Dr.  for  what  it  has  received,  and  Labor  and 
Team  Cr.  for  the  whole.  The  entries  required  for  other 
transactions  will  be  comparatively  few. 

Note  1. — If  Wheat  is  bought  for  seed,  the  entry  will  be :  Wheat- 
field  Dr.  to  Cash,  or  whatever  is  paid.  When  the  crop  is  sold,  the 
entry  will  be:  Cash,  or  what  is  received.  Dr.  to  Wheat-field,  etc. 
When  hired  men  are  settled  with,  Labor  will  be  Dr.  to  Cash,  to  what- 
ever is  used  in  payment,  or  to  the  men  themselves,  if  on  account. 
Should  the  Labor  Account,  on  closing,  have  a  Dr.  balance,  it  would 
show  the  cost  of  labor  not  properly  belonging  to  any  specific  field,  but 
to  the  farm  as  a  whole,  and  would  lessen  the  net  gain  from  it. 

Note  2. — Should  the  labor  of  the  farmer,  or  of  members  of  his 
family  interested  with  him,  but  not  specially  paid  for,  be  charged  to 


152  COMPLETE  BOOK-KEEPING. 

particular  fields,  the  Labor  Account  might  have  a  Cr.  balance  to  close 
into  Profit  and  Loss,  which  would  represent  the  family's  compensa- 
tion in  farm  improvements,  and  increase  in  values  belonging  to  the 
farm. 

166.  An  Expense  Account  would  properly  be  opened 
and  debited  for  such  general  farm  expenses  as  repairs, 
and  other  legitimate  outlays  that  do  not  belong  to  some 
specific  branch  with  which  an  account  is  kept.  When, 
at  the  close  of  a  season,  Labor  has  a  Dr.  balance,  it  would 
properly  close  into  Expense. 

167.  A  Family  Expense  Account  would  also  properly 
be  kept,  and  made  Dr.  for  every  thing  bought  for  family 
use,  including  the  market  price  of  such  products  of  the 
farm  as  might  be  used  by  the  family.  Should  several 
families  have  a  joint  interest  in  the  farm,  it  would  be 
essential,  to  an  accurate  division  of  gains  and  losses 
among  them,  that  Family  Expense  Accounts  be  kept 
for  them  severally. 

Note. — Where  a  Family  Expense  Account  is  kept,  the  books  would 
show  the  profits  from  farming,  tlie  cost  of  living,  and  the  net  increase. 
Otherwise  the  net  result  would  be  reached  without  showing  either  the 
net  gain  on  farming  or  the  cost  of  living. 


ALPHABETICAL  INDEX. 


Abbreviations  and  Signs,  6. 
Acceptance,  defined,  49. 

illustrated,  59. 

parties  to  an,  49. 

when  requiring  date,  49. 
Accommodation  Paper,  51. 

for  what  purpose  made,  52. 

effect  of,  between  parties,  52. 

effect  with  third  parties,  52. 

who  should  pay,  52. 
Account,  defined,  8. 
Account  Books,  defined,  25. 
Account-sales,  defined,  104. 
Accounts,  first  classification  of,  8. 

Personal,  8,  20. 

Real,  8. 

Imaginary,  8. 
Accounts,  2d  classification  of,  9. 

Speculative,  9. 

Non-speculative,  9. 
Accounts,  titles  of,  9,  20. 

Equation  of,  119-123. 
examples  in,  120-121. 
short  method  for,  121. 
Assets,  defined,  8. 
Average  time,  116. 

date,  117. 

Bank  Accounts,  how  kept,  23. 
Bank  Draft,  defined,  49. 

becomes  an  acceptance,  59. 

use  illustrated,  49,  58. 
Bill  Book,  form  of,  78-79. 

importance  of,  78-79. 


Bill  of  Exchange,  51. 

drawn  in  sets,  51. 

their  use,  51. 

which  is  paid,  51. 

Domestic  exchange,  51. 

Foreign  excliange,  51. 
Bills  Receivable  include,  23. 

Payable  include,  23. 
Book-keeping,  defined,  8,  16. 
Books  of  Account,  25. 

how  to  open  them,  28. 
Books,  special,  146-152. 
Business,  defined,  7. 

Cash  Account,  22. 
Cash  balance,  123-125. 

short  method  for,  124. 

examples  in,  125. 
Cash  Book,  defined,  26. 

illustrated,  100-10.3. 

favors  brevity,  101-102. 

special  columns  in,  102-103. 
Check,  defined,  48. 

who  may  make,  48. 

requires  indorsement,  48. 

becomes  a  receij)t,  48. 
Classification  of  Accounts,  8. 

First  classification  of,  8. 

Second  classification  of,  9. 
Closing  the  Ledger,  defined,  30. 

explained,  30-32,  69-77. 

by  three  entries,  31,  42-43,  75. 

by  one  entry,  32,  42-43,  75. 

Diagram  for,  33. 

(153) 


154 


ALPHABETICAL  INDEX. 


Commercial  Forms,  55-60. 
Note  on  interest,  55. 

paid  and  receipted,  56. 

indorsements  shown,  56-59. 

payable  at  bank,  57. 

indorsed  and  paid,  58. 
Commercial  Papers,  47-52. 
Consignment,  defined,  21. 
Credit,  term  of,  117. 

average  term  of,  118. 
Creditor,  defined,  7. 

Date,  average,  117. 

focal,  117. 
Day  Book,   contains,  25. 

illustrated,  40,  42,  80-83. 
Days  of  Grace,  defined,  52. 

usage  in  different  states,  52. 

tendency  to  disallow,  52. 

holidays  excepted,  52. 
Debtor,  defined,  7. 
Deposit  Book,  defined,  50. 

receipts  for  deposits,  51. 

held  by  depositor,  51. 
Deposit  Checks,  defined,  50. 

their  form  and  use,  50. 
Diagram  for  closing  Ledger,  33. 
Diary,  Physician's,  148-149. 

used  as  an  auxiliary  149. 
Discount,  defined,  24. 
Double-entry,  defined,  16. 
Draft,  defined,  48-49. 

maker  or  drawer,  49. 

drawee,  payee,  indorsee,  49. 

Bank  Draft,  49,  58. 

use  illustrated,  49,  58. 

Equation  of  Accounts,  119-123 

examples  in,  120-123. 

short  method  of,  121. 
Equation  of  Payments,  115-119. 

examples  in,  118-119. 
Examples  for  Prac,  14-16,  111-125. 
Exchange,  bill  of,  51. 

set  of,  51 . 


Exchange,  domestic,  51. 

foreign,  51. 
Expense,  defined,  22,  152, 

Family  Expense,  152. 
Farm  Accounts,  150-152. 
Farnj  Record,  150. 
Farm  Register,  151. 
Firm  Name,  defined,  20. 
First  Set,  34-46. 
Focal  date,  117. 
Fourth  Set,  104-110. 

Grace,  days  of,  52. 

in  different  states,  52. 
tendency  to  disallow,  52. 
holidays  excepted,  52. 

Illustrative  Exs.,  10-14,  16-19. 
Illustrative  Set,  34-46. 
Imaginary  Accounts,  8. 
Indorsement,  defined,  51. 

effect  of,  51. 

open  indorsement,  51. 

full  indorsement,  51. 

open  made  full,  51. 
Interest,  defined,  24. 

for  months  and  days,  52-53. 
Inventory,  how  used,  30-31. 

entered  in  red  ink,  31. 

First  Set,  42. 

Second  Set,  69. 

Third  Set,  96. 

Fourth  Set,  109. 
Invoice  Book,  contains,  26. 

illustrated,  99. 

Joint  Stock  Companies,  134-146. 
when  a  necessity,  135. 
a  species  of  partnership,  135. 
its  members  may  change,  135. 
rights  of  stockholders.  135. 
organ izat'n  of  companies,  136. 
election  of  officers.  Hi"),  145. 
books  for  current  business,  136. 


ALPHABETICAL  INDEX. 


155 


Joint  Stock  Companies,  distinctive 
features,  136. 

installment  scrip,  137. 

Installment  Scrip  Bk.,  138-139. 
when  not  required,  137. 

certificates  of  stock,  137. 
how  transferable,  137. 

Certificate  and  Transfer 
Book,  140-142. 

Capital  Stock  Ledger,  142. 

assignment  of  stock,  142-144. 

record  of  assignment,  143. 

dividends,  liow  made,  143-145. 
Journal,  defined,  26. 

illustrated,  41,  43,  84-87. 

opening  entries,  28,  54. 

current  entries,  29. 

closing  entries,  30,  75. 

special  columns,  103,  146. 
Journal  Day  Book,  26. 

its  form  and  use,  100. 
Journalizing,  rules  for,  27, 

Ledger,  defined,  28. 

illustrated,  44-46,  88-91. 

closing  the,  31,  42^3,  75. 

Diagram  for  closing,  33. 

see  Skeleton  Ledger. 
Ledger  Balances,  32,  34. 

First  Set,  46. 

Second  Set,  77. 

Third  Set,  97. 

Fourth  Set,  110. 
Liabilities,  defined,  8. 

Merchandise  Account,  21. 
Month,  defined,  52. 

when  thirty  days,  53. 

Non-speculative  Accounts,  9. 
Note,  defined,  47. 

written  or  printed,  47. 

parties  to,  47. 

negotiable,  47. 

where  payable,  48. 


Note,  presentation  necessary,  48. 
illustrations,  55-68. 

Opening  books,  defined,  28. 
Opening  and  Closing,  111-115. 

Examples  for  Prac,  111-115. 

with  Stock  Account,  112-113. 

Partners' p,  without  Stock,  113. 

Partnership,  defined,  134. 

a  firm  or  company,  134. 

how  partner  may  sell,  134. 

firm  name,  defined,  20. 
Payments,  equation  of,  115-119. 

examples  in,  118-119. 

average  time,  116. 

average  date,  117. 
Pay  Roll,  147-149. 
Personal  Accounts,  8,  20. 
Physician's  Diary,  148-149. 

auxiliary  acct.  book,  148-149. 
Posting,  defined,  27. 

suggestions  for,  27. 
Practical  Problems.  127-134. 

Commission  House,  128. 

Principal  and  Agent,  128. 

Partnership,  Lumber,  129. 

Association,  Drugs,  130. 

Sale  of  note  to  joint  owner, 
130-131. 

Special  partnei*shlp  settlem't, 
131-132. 

Closing  sets  of  books,  132-134. 
Profit  and  Loss  Account,  24. 

Real  Accounts,  8. 

Real  Estate  Account,  22. 

Record,  a  farm,  150. 

Red  Ink  entries,  14,  31-32,  49. 

Register,  a  farm,  151. 

Resources,  defined,  8. 

Sales  Book,  defined,  25. 

illustrated,  98. 
Set,  First,  34-46. 


156 


ALPHABETICAL  INDEX, 


Set,  Second,  53-91. 

Third,  92-103. 

Fourth,  104-110. 
Shipment,  defined,  22. 
Skeleton  Ledger,  73-74. 
Special  books,  146-152. 

how  advantageous,  146. 

illustrations,  148-149. 
Special  columns,  102-103,  146. 
Speculative  Accounts,  9. 
Stock  Account,  defined,  20. 

Term  of  credit,  117. 

average  term  of,  118. 

examples  in,  118-119. 
Third  Set,  92-103. 


Third  Set,  rewritten,  100-103. 

Time,  average,  116. 

Time  Book,  its  use,  147-149. 

becomes  a  Pay  Roll,  147-149. 

book  of  original  entry,  147. 
Time  Table,  126. 

how  used,  126. 
Titles  of  Accounts,  9,  20. 
Transaction,  defined,  7. 
Trial  Balance,  defined,  29. 

what  it  indicates,  30. 

for  First  Set,  46. 

for  Second  Set,  65,  71. 

for  Third  Set,  97. 

for  Fourth  Set,  110. 

taken  monthly,  29,  53. 


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